‘Vessel fund must deliver tangible trade gains’

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A former President of the African Shipowners Association, Captain Ladi Olubowale, has stated that the success of the Cabotage Vessels Financing Funds should not be measured simply by the amount available to individual shipowners, but by how effectively the funds are linked to actual trade opportunities.

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The foremost shipowner added that a $25m facility under the CVFF could be sufficient to acquire a sizable vessel if the financing is tied to identifiable cargo and long-term trade contracts.

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Olubowale disclosed this in Apapa on Tuesday during a roundtable meeting with members of the Maritime Reporters Association of Nigeria.

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A document sighted by The PUNCH indicated.

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“The success of the CVFF should not be measured simply by the amount available to individual shipowners, but by how effectively the funds are linked to actual trade opportunities,” Olubowale said.

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According to him, the availability of cargo and a guaranteed trade contract could enable shipowners to acquire vessels, generate revenue and repay the financing.

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Olubowale stressed that ship acquisition should be driven by commercial opportunities, arguing that the key consideration in the fund disbursement should be what trade the vessel would be deployed to serve.

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He noted that the $25m should not be viewed in isolation because different types of vessels serve different cargo requirements.

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According to him, Nigeria needs to identify the cargo volumes available in the country and match them with the appropriate vessels before deploying the CVFF.

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He cited dry cargo, cement and other commodities as examples of trades requiring specially built vessels, adding that the country should not simply finance vessel acquisition without first establishing the commercial demand for such vessels.

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Adebowale said a properly structured $25m facility could enable an operator to acquire a vessel suited to a specific trade, particularly where there is a one- or two-year contract guaranteeing cargo.

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He noted that the financing could then be repaid from the proceeds of the trade, making the vessel commercially sustainable.

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The shipowner further argued that the CVFF should be deployed as part of a broader national fleet development strategy rather than being viewed solely as individual financing for shipowners.

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He said that with an estimated $700m in the fund, Nigeria could develop a national fleet covering different cargo segments if the money was strategically allocated and guided by industry professionals.

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“Most of this shipping does not require a big capital. It requires you to have a 10 per cent deposit as long as you trade to cover up that money,” Adebowale said, arguing that the availability of trade could significantly improve the viability of CVFF-backed vessel acquisition.

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He also disclosed that several banks had approached his company over the CVFF, with banks presenting term sheets outlining the financing requirements, including equity contributions and other conditions.

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Adebowale said the development represented a change from previous years, when shipowners had largely complained about the prolonged process of accessing the fund.

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He maintained that the focus should now be on ensuring that the CVFF produces tangible economic value by increasing Nigeria’s indigenous fleet and enabling Nigerian operators to capture a greater share of the country’s maritime trade.

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In July, Guardian reported that only 20 per cent of the 70 applicants have successfully met the eligibility requirements and are currently undergoing the relevant processing, 136 days after the portal was officially launched.

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