A former director general of the Nigerian Maritime and Administration Safety Agency (NIMASA), Temisan Omatseye, has disclosed that the Cabotage Vessel Financing Fund (CVFF) is held in naira, not dollars as previously reported. The fund, which has been accruing a percentage of charter rates for 23 years, was created to help indigenous shipowners finance the acquisition of their own vessels. Omatseye made this revelation at a summit by the Shipping Correspondents Association of Nigeria in Lagos.
According to Omatseye, the CVFF is converted to naira every last week of the month, when the agency collects dollars and automatically changes it to naira at the present exchange rate. This decision was made due to the interest rate disparity between dollar and naira deposits at the time. The Accountant-General of the Federation, Ibrahim Dankwambo, had opted to hold the fund in naira, earning a better interest rate of 23-25 percent, compared to 1-2 percent in dollars.
NIMASA has previously reported the cabotage vessel fund in dollar value, creating doubt among stakeholders. In 2023, the then director-general, Bashir Jamoh, stated that the fund held up to $350 million with the Central Bank of Nigeria. However, there has been no update on the fund's volume since then. The effects of recent reforms, including the floating of the naira, which devalued the currency, would calculate differently today.
Omatseye explained that the deposit is calculated against the exchange rate at the time of collection. Therefore, if the exchange rate is N1,350 per dollar today, the naira value would be expected to be different from the initial $350 million reported. He emphasized that the arrangement calls into question the real value of the CVFF, and transparency in the fund's management and disbursement process has historically been low.
Shipowners have frequently requested an audit of the account, and in January, the Ministry of Marine and Blue Economy created a portal to allow shipowners to apply for a part of the fund. Since then, 92 applications have been made, but only one has successfully cleared assessment from NIMASA and the PLIs, and is still awaiting final approval from the Minister.
The revelation by Omatseye has raised concerns about the management of the CVFF and the need for greater transparency. The fund's management and disbursement process have been criticized for lacking transparency, and stakeholders are calling for an audit of the account. The Ministry of Marine and Blue Economy's portal is a step towards increasing transparency, but more needs to be done to ensure the fund is utilized effectively.
The CVFF is a critical fund for indigenous shipowners, and its effective management is crucial for the growth of Nigeria's maritime industry. The industry has been calling for greater transparency and accountability in the management of the fund, and Omatseye's revelation has highlighted the need for urgent reforms.
Key points
- The Cabotage Vessel Financing Fund is held in naira, not dollars as previously reported.
- The fund's value is calculated against the exchange rate at the time of collection.
- Transparency in the fund's management and disbursement process has historically been low.
