Brief History of the Cabotage Vessel Financing Fund (CVFF)
The Cabotage Vessel Financing Fund (CVFF) was established under the Coastal and Inland Shipping (Cabotage) Act of 2003 in Nigeria. The Act aimed to promote the development of indigenous shipping capacity by restricting the operation of vessels within Nigerian coastal waters to Nigerian-owned, crewed, built, and flagged vessels. To support this vision, the CVFF was introduced to provide financial assistance to indigenous shipowners to acquire and maintain vessels for cabotage trade.
The fund is sourced primarily from a 2% surcharge on all cabotage contracts, and is supplemented by other sources as determined by the Federal Government. It is managed by the Nigerian Maritime Administration and Safety Agency (NIMASA). However, for over two decades, the disbursement of the CVFF was stalled due to bureaucratic bottlenecks and concerns over accountability.
Recent Developments
After over two decades of limited disbursement, the Federal Government has taken decisive steps to activate the CVFF. 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. This move aims to empower indigenous shipowners, strengthen Nigeria's maritime capabilities, and stimulate economic growth within the sector.
Also read: Leveraging Technology for Maritime Security: A Solution to Piracy Threats in Nigeria
Eligibility and Application Guidelines
According to the latest circular issued by NIMASA, applicants seeking to benefit from the CVFF must meet specific criteria:
- Equity Contribution: Applicants are required to provide a minimum equity contribution of 15% of the total cost of the vessel they intend to acquire.
- Loan Ceiling: The maximum loan amount available to a single beneficiary is capped at $25 million.
- Application Process: Interested shipowners must submit a formal application to NIMASA, detailing their business plan, financial statements, and other relevant documentation as specified in the agency's guidelines.
Strategic Importance
The activation of the CVFF is a significant milestone in Nigeria's maritime sector. It is expected to:
- Enhance Indigenous Participation by providing financial support, the fund aims to increase the number of Nigerian-owned vessels operating in domestic waters.
- Boosting economic Growth by strengthening the capacity of local shipowners is anticipated to create jobs, foster skill development, and contribute to the nation's GDP.
- Reduce Dependence on Foreign Vessels: Increasing the fleet of indigenous vessels will lessen reliance on foreign ships, retaining more economic value within the country.
Several countries have implemented financing schemes similar to Nigeria's CVFF to develop indigenous shipping capacities. Here's how the CVFF compares:
Countries like the United State of America, South Korea, Philippine etc have a equivalent of CVFF in their Countries.
Conclusion
The renewed commitment to the CVFF underscores the government's dedication to revitalising Nigeria's maritime industry. Eligible shipowners are encouraged to engage with NIMASA to understand the application process and take advantage of this opportunity to expand their operations and contribute to the nation's economic development. To match global standards, Nigeria must ensure transparency, timely disbursement, continuous oversight, and possibly expand CVFF's scope to cover green shipping and technological upgrades, aligning it with international trends in maritime development.
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