INTRODUCTION
Maritime is capital-intensive. A single workboat, tug, PSV, or small tanker can run into the low–mid tens of millions of dollars; even coastal barges and crew boats require multi-million-dollar tickets/investments. For Nigeria, that capacity gap in coastal shipping is exactly what the Cabotage Vessel Financing Fund (CVFF) was created to address.
The Cabotage Vessel Financing Fund (CVFF) is not a novel initiative. It was established under the Coastal and Inland Shipping (Cabotage) Act of 2003 to promote indigenous shipowners, strengthen local content in the maritime sector, and establish a sustainable financial base for vessel acquisition by Nigerians. However, despite all the years of recourse to the fund, commentaries on the significant impact it would have on the maritime climes, and contributions in billions of naira from shipowners, it has been met by successive administrations that failed to operationalize the fund, leaving it trapped between policy intent and practical implementation.
Now, after more than two decades, the Federal Government has finally moved to operationalise and disburse the Fund. In April 2025, the Minister of Marine and Blue Economy, Mr. Adegboyega Oyetola, directed the Nigerian Maritime Administration and Safety Agency (NIMASA) to commence the disbursement process, with the Director General of NIMASA, Dr. Dayo Mobereola, pledging commencement by August 2025.
However, with the rising cost of maritime financing and vessel acquisition in Nigeria, starting in August 2025, the month set aside to begin the disbursement, now ended, the conversation around the CVFF is both timely and necessary. This article considers maritime financing from a general perspective and how it applies to the CVFF, the prospects of disbursement, the reasons for the delay, and the implications that a well-structured financing framework would hold for indigenous shipbuilding and vessel ownership.
Maritime Financing and key sources of capital in Maritime Finance in Nigeria
Maritime financing is essentially about how capital is raised to keep ships moving and ports alive. Because vessels and related infrastructure are so expensive, shipowners have always relied on a mix of funding sources. Some of the various capital sources for maritime projects include bank loans, equity and debt financing, government development funds via grants or low-interest loans, or private equity.
For Nigeria, many of these channels are either underdeveloped or too costly, leaving local operators at a disadvantage. That is why the Cabotage Vessel Financing Fund (CVFF) was created.
The CVFF Disbursement
The CVFF is a dedicated pool, funded from cabotage trade, to fill the financing gap and give indigenous shipowners a fair chance at acquiring and operating vessels competitively.
The collection and disbursement of the CVFF is anchored in Section 42(1) – (2) of the Cabotage Act, 2003, which was enacted to promote indigenous ship acquisition capacity by providing financial support and assistance to Nigerian operators engaged in coastal shipping. In the same vein, the Cabotage Vessel Financing Fund Guidelines 2006 were issued pursuant to section 44 of the Act, prescribing the procedure for the administration and implementation of the CVFF.
Yet, since the implementation of the Cabotage Act in 2004, indigenous shipowners have continued to await the actual disbursement of the Fund.
Recently, there has been some reassurance that the fund is not a fraudulent scheme or a myriad of promises, and unrealistic hopes. Conversations have circulated across the internet that the delay has come to an end, and after over two decades, disbursement was supposed to commence in August 2025.
What is the Fund intended for?
The Cabotage Act created the Cabotage Vessel Financing Fund (CVFF) to ease vessel acquisition by offering credit facilities to Nigerians and promoting indigenous ownership.
Section 43 of the Act, together with the Guidelines that give effect to it, sets out the sources of funding by providing that certain payments shall be made into the Fund, that is,
a. a surcharge of 2 per centum of the contract sum performed by any vessel engaged in the coastal trade:
b. a sum as shall from time to time be determined and approved by the National Assembly:
c. monies generated under this Act, including the tariffs, fines, and fees for licences and waivers;
d. such further sums accruable to the fund by way of interests paid on and repayment of the principal sums of any loan granted from the Fund.
The CVFF disbursement would undeniably and positively impact the maritime industry in the areas of job creation, reduced capital flight, and minimize foreign vessel chartering, considering that less than 5% (five percent) of ships operating under NIMASA’s control belong to Nigerians.
But while the Act is laudable on paper, challenges persist, particularly the failure of indigenous shipping companies to draw from the CVFF and the recurring problem of unchecked licensing and waivers for foreign vessels.
In salvaging this, the House of Representatives passed a bill to amend the Act on March 13, 2025, to restrict the use of foreign vessels in domestic, coastal, and inland commercial activities, thereby paving the way for Nigerians to operate without any vessel contest with foreign vessels and limit their access to Nigerian waters. The bill also aims to establish a cabotage vessel financing fund.
A disbursement framework has been established through twelve Primary Lending Institutions, featuring a 2 (two) year moratorium and an 8 (eight) year repayment period at single-digit interest rates, to make vessel financing more accessible and sustainable.
To qualify, a vessel must be Nigerian-owned, built in Nigeria, operated and managed by Nigerians, and must have been acquired within 12 months before the application.
Note that the number of Primary Lending Institutions (PLIs) was expanded in April 2025 from five to twelve to manage the $700 million intervention fund efficiently. These banks are responsible for conducting the initial risk assessment and will contribute 35% of the loan, while NIMASA will provide 50%, with the remaining 15% as equity from the shipowners.
The twelve PLIs designated to facilitate access to the Fund are:
1. First Bank of Nigeria Ltd
2. Optimus Bank Limited,
3. Bank of Industry
4. Jaiz Bank Plc
5. Union Bank of Nigeria Plc
6. Sun Trust Bank Nigeria Limited
7. Stanbic IBTC Bank Limited
8. Zenith Bank Plc
9. Globus Bank Limited
10. Fidelity Bank Plc
11. United Bank for Africa Plc; and
12. Lotus Bank Limited.
Why has the disbursement taken so long?
Despite being on the books since 2003, CVFF has seen serial false starts. The proximate causes have shifted over time, but the themes are consistent, some of which are:
· Changes in ministers/agency leadership repeatedly reset processes, guidelines, and PLI shortlists
· Bankability gaps. As recently as this August 2025, shipowners and banks were still sparring over PLI terms vs. other Nigerian industry funds. The cumbersome requirements of some of the shortlisted PLI banks are gradually thinning out the plans of indigenous shipowners to apply for the $700 million CVFF, which includes unrealistic bank interest rates.
· Cargo access and enforcement uncertainty. Financing only works if vessels have predictable work. Until recently, there was no clear line-of-sight to guaranteed coastal cargoes and tighter cabotage enforcement—undermining lenders’ confidence. On the flip side, NIMASA now says it is working with NNPC/NLNG/exporters to secure cargo and guarantee availability for Nigerian-owned vessels. This promise was made in April 2025.
· Political economy factors
The promise of disbursement in August 2025
During a recent breakfast meeting organized by the Nigerian Chamber of Shipping on August 19, 2025, the Minister of Marine & Blue Economy stated the FG had directed NIMASA to commence disbursement to qualified owners.
NIMASA has (at various points this year) touted single-digit rates, a moratorium on principal, and defined maximum ticket sizes (up to $25m per approved firm) routed through the PLIs. While several promises and affirmations of disbursement have been given to qualified indigenous shipowners, for now, the promise of August disbursement still remains so, until access to the funding and activation finally takes effect, moving us from paper cabotage to actual local content and indigenous capacity strengthening.
Potentials the disbursement could unlock when it finally happens
The possibilities are endless when it comes to financing a capital-intensive industry like the maritime industry. Ships are expensive, banks are cautious, and the FX risk is baffling. With a funding window like the CVFF, should the promised disbursement finally take effect, not only would it be the most consequential intervention in Nigeria’s maritime industry, the areas of potential it could unlock are as follows:
1. Renewal and expansion of Nigeria’s indigenous fleet
2. Job creation for seafarers, shipyard workers, and allied maritime professionals
3. Skills transfer and professionalization of Nigerian shipping companies
4. Minimal operating and maintenance costs through the acquisition of newer, more efficient vessels
5. Stronger compliance with safety and international standards.
6. Enhanced local participation in coastal and offshore shipping markets.
7. Boost local shipbuilding and repair yards
8. Improved access to cargoes (especially NNPC, NLNG, and coastal trade), among others.
CONCLUSION
The Cabotage Vessel Financing Fund has lived more in promise than in practice for over two decades, often spoken of as a cure-all but held back by politics, policy missteps, and structural gaps in Nigeria’s financial and maritime landscape. August has come and gone, and yet again, Nigeria’s indigenous shipowners are left waiting. The Fund that was meant to be a lifeline remains a headline. The longer the delay, the more CVFF risks sliding from policy tool to political myth. Whilst the opportunity is not lost. The money exists, the banks have been lined up, and the cargo is there to be lifted. What is missing is the courage to move from pronouncements to performance. The true test of CVFF is no longer in whether it can be disbursed, but whether it can be deployed transparently, managed sustainably, and allowed to build a fleet that outlives political cycles.
Where Nigeria can bridge that gap, CVFF could become the lever that shifts our maritime sector from dependency to self-reliance.
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