The Federal Government has launched the Cabotage Vessel Financing Fund (CVFF) application portal to enable indigenous shipowners process and access a $25 million loan facility within 70 to 80 days at a 6.5 per cent interest rate and a repayment period of eight years.

Speaking at the launch yesterday, the Director-General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr Dayo Mobereola, said the applicable interest rate on the loan has been fixed at 6.5 per cent after adjustments by the financial consultant, the agency and the primary lending institutions (PLIs). He said the revised rate reflects the agency’s commitment to easing the financial burden on indigenous shipowners.

Mobereola stated that the shipping industry is capital-intensive and requires long-term, patient capital to thrive, adding that the eight-year repayment window is designed to give shipowners sufficient time to stabilise operations, build confidence, generate revenue and meet their repayment obligations without undue pressure.

He stated that NIMASA has established a dedicated CVFF unit to drive implementation, manage applications, coordinate with financial institutions and ensure strict adherence to eligibility, compliance and risk management procedures.

Presenting details of the disbursement process to stakeholders during the launch of the portal in Lagos, the Financial Consultant for the CVFF, Buhari Yusuf, said the disbursement of the funds will commence in a few weeks with clear funding ratios, interest rate, timelines and bank participation now defined.

On the timelines, Yusuf said the application and structuring phase, from the applicant through the Primary Lending Institutions (PLIs), including the preparation of a term sheet and notification to NIMASA, is capped at a maximum of 30 days to process.

He said NIMASA’s internal review, issuance of an eligibility certificate and forwarding of applications to the Minister of Marine and Blue Economy for final approval is expected to take about seven days.

Yusuf added that the final approval by the Minister has been allocated a maximum of 30 days, excluding the time taken by applicants to meet conditions precedent for disbursement.

He said once all conditions are met and a disbursement request is submitted by a PLI, NIMASA will release its portion of funds within 72 hours, while the PLIs are expected to immediately deploy the loan to beneficiaries to acquire vessels or other approved maritime assets.

Detailing the process of application, Yusuf explained that applicants seeking access to the fund must present bankable, transaction-based proposals supported by feasibility studies and must also provide equity contributions to demonstrate commitment to the projects being financed.

Yusuf, however, listed the 12 financial institutions pre-qualified to participate in the CVFF framework to include Zenith Bank, United Bank for Africa (UBA), Union Bank, Taj Bank, SunTrust Bank, Stanbic IBTC, First Bank, Optimus Bank, Lotus Bank, Jaiz Bank, Fidelity Bank and the Bank of Industry (BOI).

The Minister of Marine and Blue Economy, Dr Adegboyega Oyetola, explained that the digital and rules-based framework ensures that the CVFF is insulated from arbitrariness, opacity and administrative practices that have undermined similar interventions in the past, while reinforcing confidence among investors, financial institutions and indigenous operators.

Oyetola urged beneficiaries to meet their obligations fully, ensuring that this intervention remains available not only to current applicants but also to future generations of Nigerian maritime entrepreneurs.

He said the Ministry, in collaboration with NIMASA, is working closely with the Federal Ministry of Finance, the Central Bank of Nigeria, and other key stakeholders to resolve outstanding issues around the CVFF and establish a framework that not only meets national expectations but also adheres to international best practices.

Meanwhile, shipowners welcomed the digital initiative and extended their support, but solicited a review of the repayment structure and period, as well as sourcing for cargo to ensure the financing initiative achieves its objective of strengthening local shipping capacity.

Former President, Ship Owners Association of Nigeria (SOAN), Dr. MkGeorge Oyung, expressed concerns on the sustainability of the repayment structure, noting that the eight-year duration for the $25 million for vessel financing may be too short for operators to remain commercially viable.

Giving a financial breakdown, Oyung said a $25 million loan spread over eight years would require repayments of about $8,500 per day, excluding operational costs.

Oyung explained that for such a repayment plan to be realistic, vessel owners would need to secure daily charter contracts of between $14,000 and $20,000.