Nigeria has begun the long-awaited disbursement of the $700 million Cabotage Vessel Financing Fund (CVFF), bringing to an end more than two decades of delay in making the fund accessible to indigenous shipowners.

The move follows the launch of a digital application portal by the Minister of Marine and Blue Economy, Adegboyega Oyetola, in Lagos last week.

The portal will allow eligible Nigerian shipowners to apply for financing under the Coastal and Inland Shipping (Cabotage) Act of 2003, which established the CVFF to support local vessel ownership.

The CVFF has accumulated over $700 million since 2003 through a 2% compulsory levy on cabotage-protected shipping activities.

However, Nigerian shipowners were unable to access the fund for 23 years due to the lack of a clear framework for disbursement and concerns over transparency and governance.

Under the approved structure, eligible applicants can access up to $25 million each, covering 70% of the loan amount.

Beneficiaries must provide at least 15% equity, while the remaining 15% will be financed by participating banks. The loans will have a tenure of eight years and attract an interest rate of 6.5%.

The fund will be managed by the Nigerian Maritime Administration and Safety Agency (NIMASA) in partnership with vetted Primary Lending Institutions (PLIs).

Applications will be submitted and processed digitally, with banks responsible for credit assessment, due diligence and loan administration.

NIMASA has also set up a dedicated CVFF unit to oversee the process and ensure compliance.

Officials have stated that the CVFF is designed as a revolving fund, meaning repayments from beneficiaries will be used to support future lending.

The aim is to strengthen Nigeria’s shipping capacity, reduce dependence on foreign-flagged vessels and retain more value within the domestic economy.

The activation of the fund follows earlier policy signals from Oyetola, who last year announced plans to end the widespread waivers granted to foreign vessels operating in Nigerian coastal waters.

These waivers had been issued due to limited local capacity, despite the Cabotage Act restricting coastal shipping to Nigerian-owned or operated vessels.

The President of the African Shipowners Association–Nigeria, Ladi Olubowale, has stated that the fund offers a major opportunity for Nigerian shipowners to expand and modernise their fleets.

In 2024, the Clarion Group launched Clarion Shipping, Nigeria’s first fully indigenous container line, acquiring a 349 TEU container feeder vessel, Ocean Dragon, with plans to expand across West Africa.

Nigeria also welcomed its first locally owned FPSO, FPSO Emem, owned by Oriental Energy Resources.

References: indexbox, BusinessDay