Shipping experts in Lagos have expressed concerns over the slow pace of cabotage vessel financing fund disbursements, attributing the delays to the Nigerian Maritime Administration and Safety Agency's (NIMASA) poor regulatory framework and banks' stringent conditions. This was discussed at the annual summit of the Shipping Correspondents Association of Nigeria (SCAN). The experts emphasized that regulatory uncertainty drives up investment costs, discouraging long-term financial commitments needed to build a robust domestic maritime fleet.
Maritime Lawyer and former President of the Nigeria Bar Association, Dr. Olisa Agbakoba, highlighted the need for a stable and transparent operational framework to thrive in Nigeria's maritime sector. He stated that regulatory uncertainty increases investment costs and discourages long-term financing. Agbakoba called for consistent enforcement of maritime regulations, transparent administrative procedures, and clearly defined institutional responsibilities to restore investor confidence and unlock critical funding.
Agbakoba emphasized the importance of effective coordination between NIMASA and key government bodies, including the Federal Ministry of Marine and Blue Economy, the Nigerian Ports Authority (NPA), and the Nigerian Ports Economic Regulatory Agency (NPERA). He noted that only an aligned, transparent regulatory environment can ensure timely disbursements and empower local shipowners to drive the nation's maritime economy. This, he believes, will prevent indigenous operators from losing lucrative opportunities in coastal trade to foreign competitors.
According to Agbakoba, banks and institutional investors must become active partners in developing Nigeria's National Fleet. This requires specialized maritime credit expertise, reliable vessel valuations, technical assessments, and sound legal advice on ship mortgages, charter contracts, insurance, and cross-border enforcement. He suggested that financing should be tailored to each vessel's commercial circumstances, taking into account factors such as charter contracts and spot-market earnings.
Agbakoba discussed the Cabotage Vessel Financing Fund (CVFF), an important instrument for supporting indigenous vessel ownership. However, he noted that fleet development cannot depend principally on public financing. Instead, public financing should support viable projects and mobilize private capital, not substitute for a functioning commercial shipping market. The Fund should complement commercial bank lending, development finance, private investment, and cargo-backed financing.
The administration of the CVFF requires transparent eligibility criteria, rigorous credit assessment, appropriate collateral, clear risk allocation, effective monitoring, and recovery arrangements. Agbakoba's suggestions aim to ensure that the Fund is used effectively to support the growth of Nigeria's maritime sector. The sector, he believes, has the potential to drive the nation's economy if given the right support and regulatory framework.
The slow pace of cabotage vessel financing fund disbursements has significant implications for Nigeria's maritime sector. The experts' suggestions, if implemented, could help unlock critical funding and support the growth of a robust domestic maritime fleet. This, in turn, could help drive the nation's economy and reduce reliance on foreign competitors in coastal trade.
Key points
- Experts blame NIMASA's regulatory framework and banks' stringent conditions for delays in cabotage vessel financing fund disbursements.
- A stable and transparent operational framework is needed to thrive in Nigeria's maritime sector.
- Public financing should support viable projects and mobilize private capital, not substitute for a functioning commercial shipping market.
