Nigeria’s $700m maritime rescue fund caught in approval maze

Nigeria promised shipowners cash in 90 days. It’s been 210 days and no sign of the cash.

Seven months after Nigeria opened applications for a $700 million vessel-financing fund meant to revive the country’s struggling indigenous shipping industry, shipowners are still waiting for their first disbursement.

The Cabotage Vessel Financing Fund (CVFF), created under the Coastal and Inland Shipping (Cabotage) Act of 2003, was designed to help Nigerian operators acquire and build their own vessels and reduce the dominance of foreign companies in the country’s coastal trade.

Each year, Nigeria transports over 180 million tons of seaborne trade, generating more than $6 billion in freight revenue, 80 percent of which goes to foreign firms.

The government revived the scheme after more than two decades of stalled implementation when Adegboyega Oyetola, Minister of Marine and Blue Economy, launched an application portal in January, creating the first formal channel for shipowners to plug in. Eligible fully Nigerian-owned operators can apply for up to $25 million.

As many as 60 shipowners have since applied, but no funding has yet been disbursed. They were promised that the entire process would not exceed 90 days.

“To the best of my knowledge, no shipowner has received the funding yet,” Aminu Umar, president of the Nigerian Chamber of Shipping, confirmed to BusinessDay.

The Nigerian Maritime Administration and Safety Agency (NIMASA), which manages the fund, did not respond to requests for comments. However, when queried about the disbursement delay during a webinar on maritime compliance, Anthony Ani, principal legal officer at the agency, told BusinessDay that “applicants must meet the criteria for obtaining loans from the banks as the banks bear the onus for disbursing accordingly as they bear all the risk.”

The CVFF is structured as a blended financing scheme. To ensure the borrower has enough skin in the game, every applicant must provide an equity contribution of 15 percent of the total project costs, while NIMASA provides 50 percent. Banks designated as Primary Lending Institutions (PLIs) finance the remaining 35 percent but assume 100 percent of the credit risk.

Twelve banks were assigned, including Zenith Bank, Polaris Bank, Union Bank, Jaiz Bank, United Bank for Africa (UBA), First Bank, Fidelity Bank, Stanbic IBTC, SunTrust Bank, Lotus Bank and Globus Bank.

When contacted, UBA told BusinessDay that they were unable to provide any update as “the scheme is currently under development.”
Zenith Bank, another PLI, which reported receiving some applications, revealed to BusinessDay that although operators were informed in January that they could start applying for the fund through a portal, the process did not become operational for several months.

This was due to some “fine-tuning” that needed to be completed between NIMASA and the designated lenders.

The disbursement process begins with the banks, who must review potential beneficiaries against their Risk Assessment Criteria to determine their creditworthiness. For Zenith Bank, the strongest applications are those in which the vessel has a clear commercial purpose, preferably backed by a contract or identifiable business opportunity.

“There would be no vessel financed without a contract attached to it,” Anokwuru Mike, group head, Oil and Gas at UBA, told BusinessDay. “It’s not wise for anybody to go and buy a vessel and freelance if you don’t have a contract to support that vessel,” he said.

He argued that an idle vessel quickly becomes a liability as financing costs continue to accrue regardless of operation.

“Each day the vessel stays doing nothing, it’s accumulating interest. Our interest is, what will this vessel do when it comes? Which contract or business are you deploying it to?” he said.

On NIMASA’s CVFF portal, applicants are immediately informed of the 27 required documents they must prepare for their application, including project and vessel information that comes with a detailed business plan and feasibility report, financial information, corporate and legal documents, and security and structuring documents.

The PLIs are to offer single-digit interest rates, which are determined on a weighted-average basis. Mike did not disclose Zenith Bank’s rate but said the average peaks at nine percent. Based on BusinessDay’s calculation, a nine percent weighted average lending rate would imply the bank offers 17.1 percent, below the prime lending rate of 19.06 percent as of June 2026.

So far, Zenith Bank has received and processed up to five applications for the procurement of vessels in oil and gas cabotage trade, three of which were successful. It is expected to deliver them to NIMASA in a week, Mike said.

The bank claims its internal credit review takes no more than two weeks once an application is complete, followed by about a week to transmit the application to NIMASA. The agency’s review should take another two weeks, Mike said.

Once NIMASA receives the vetted applications, the agency submits them to the Ministry of Marine and Blue Economy for approval. According to the CVFF Guidelines of 2006, if the ministry is not able to approve it within 30 days, NIMASA has veto power to make a decision on the application.

Once that process is completed, the funds are issued to the shipowners through the PLI from the Central Bank of Nigeria (CBN), where they are domiciled.

Shipowners have said the delay was not completely unexpected, given the risk-aversion of Nigerian commercial banks and the multiple layers of approval required for the financing.

“For companies already in that space that have done many processes through banks alone, [we] will surely understand that it will take time. Many of us have already factored in that it will be delayed due to government processes [that] will go through many layers of approvals,” Umar of the Nigerian Chamber of Shipping told BusinessDay.

Expert analysis suggests that the biggest incentive to adoption will be increased investment in the maritime sector, supported by reforms to make the sector more attractive to investors.

“There may still be a need for some overhauling of the sector to make it more viable to investors,” said Ayodeji Ebo, an investment analyst and CEO of MDU Capital. “In shipping, have they automated some things, devalued some things that would make revenue collection improve? Those are some of the things that the banks may be looking at,” he added.