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Endless Wait for Cabotage Fund

01 Feb 2013

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Idris Umar, Transport Minister



The delay in the disbursement of the Cabotage Fund has retarded the growth of the maritime sector of the economy just as it has given room for speculations in some quarters, writes John Iwori

“Before the end of this year, I can assure you that the Cabotage Vessel Finance Fund (CVFF) will be disbursed. Everything about the disbursement has been concluded and very soon I shall invite you to witness the exercise”.

This was the response of the erstwhile Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Mr. Temisanre Omatseye, when he was asked in 2010 to state when the Cabotage Vessel Finance Fund (CVFF) would be disbursed. The occasion was an interactive session with journalists and stakeholders to mark Omatseye’s one year in office.

Waiting Game
The venue was at the main auditorium of the Regional Maritime Resource Centre (RMRC), Kirikiri, Apapa, Lagos. It was a well-attended event as key players in the maritime sector of the economy were all present. It was not strictly a media affair. This is because some stakeholders who wanted to have unfettered access to Omatseye also came.

The auditorium was filled with many persons, especially those who came late and were standing. There was no vacant seat. The ebullient former helmsman of the multibillion naira agency was in his element as he assured stakeholders that he would do everything possible to ensure that the cabotage funds were released to qualified beneficiaries before the end of that year.
A lawyer by profession, Omatseye, who was flanked by other top management staff of the agency then, was on the high table as he laboured to allay fears on the delay of disbursing the funds. Though Omatseye’s words were reassuring but not many those present at the expansive premises were convinced.

They adopted a ‘wait and see’ posture. And they were right. By December 2010 the much awaited funds were not disbursed. Omatseye had since been removed from office while the waiting game continues. It was not only Omatseye that promised the release of the funds and failed.

Other top government officials, including the Minister of Transport, Senator Audu Idris Umar, have also promised to release the funds to no avail. Not a few stakeholders in the maritime sector of the economy have continued to ask questions why the CVFF has not been disbursed till date despite repeated promises to do so.
The situation is not helped by the fact that while the waiting game continues, the primary purpose of setting up CVFF is being defeated as the situation in the sector becomes more worrisome.

Why Cabotage
It is pertinent to note that Cabotage came into being with the enactment of the Coastal and Inland Shipping Act 2003. The provisions of the Act made it clear that only indigenous shipowners have the mandate to carry out coastal trade and inland shipping.

In fact, the Act is pillared on its core thematic provisions, which set out the limitations on foreign operations of cabotage shipping, and the tight conditions under which exceptions can be allowed. These provisions are set out in sections 3 to 6 of the Act, which prohibit coastal carriage of cargoes and passengers except by wholly Nigerian owned, manned, built, and registered vessels.
It also restricts towage by tugs or vessels to those wholly owned by Nigerian citizens just as it limits carriage of petroleum products and related oil and gas shipping services to vessels of Nigerian ownership. Furthermore, the Acts prohibits domestic trading in the inland waters of Nigeria except in vessels wholly owned by Nigerians.

It was in a bid to drive the implementation of the Act that the Federal Government initiated CVFF. The management of NIMASA is saddled with the responsibility of managing the fund. It is in line with its mandate as enshrined in the NIMASA Act 2007. This was the basis why the agency selected four commercial banks as primary lending institutions (PLIs). These include Sky Bank Plc, Sterling Bank Plc, Diamond Bank Plc, and Fidelity Bank Plc.

To ensure the effective disbursement of the fund, the federal government, in 2010 at Dipcharima House, the Corporate Headquarters of the Federal Ministry of Transport, Abuja signed an agreement with the four PLIs. As if the signing of the agreement was mere window dressing without the political will to address the challenges of Nigerian ship owners, nothing concrete has been done to release the funds since then.

Many stakeholders have wondered why the federal government is yet to commence the actual disbursement of the funds, more than five years after it promised to do so.

The undue delay in the release of the funds was one of the main reasons why the umbrella body of Nigerian ship owners, Indigenous Ship Owners Association of Nigeria (ISAN) described 2012 as a disastrous one for local shipping operators. As if that was not bad enough, ISAN, which has the Managing Director and chief executive officer of MORLAP Group, Chief Isaac Jolapamo as its Chairman, also said its members are not expecting anything good to come out of President Goodluck Jonathan’s administration this year in terms of developing the shipping sector.

The General Secretary of ISAN, Captain Niyi Labinjo, had in a report last month accused the federal government of deliberately taking actions that continue to stifle the growth of maritime, resulting in diminished investments and collapse of over eighty per cent of indigenous shipping companies.

Apparently frustrated by the inability of most government officials to match their words with concrete actions, Labinjo, who was in the Nigerian Navy before his retirement and foray into shipping, said: “From this government, we expect nothing in 2013. It will be disaster as usual. Our investments continue to diminish and more shipping companies continue to fold up.”
Already, the long and undue delay in the disbursement of the over $100 million that has accrued into CVFF has lent credence to insinuations in some quarters that those close to the corridors of power have started helping themselves to the funds.

Those who believe that the funds have been diverted into private pockets alleged that this was perfected with the alleged connivance of some officials in the Federal Ministry of Transport, NIMASA and members of the National Assembly.

Already, tongues have started wagging on the high interests that have accrued on the placement of the funds in the commercial banks. Incidentally, no government official is ready to make public the names of the banks and the amount lodged.

Most importantly, no government official is ready to make public the amount of interest the funds have accumulated from the date the money was lodged in the bank till date. THISDAY checks revealed that the huge interests involved in the lodgment of the funds is the key factor responsible for the rat race by banks to be the one to have CVFF in their vaults.

Unasked Questions on Funds
When will government disburse the CVFF? This is the one million, nay, billion naira question on the lips of key players in the maritime sector of the economy. Will government disburse the funds this year? If yes, when exactly will it do so this?
It is true that hundreds of applicants have applied for the funds. Not less than eight of them were selected after a screening process that not a few stakeholders described as “too rigid and cumbersome”.

Though Umar did not pick his calls when this reporter called, one of his aides who preferred anonymity told THISDAY last week that the rigorous process adopted by the government was informed by the need to avoid the pitfalls of the past when millions of naira were given to indigenous shipowners under the auspices of the ship acquisition and ship building funds (SASBF) which was given to some ship owners but was diverted to uses except shipping by the beneficiaries many years ago.

“Government wants to make sure that the right thing is done. We want to ensure that only those who are really desirous of practically adding value to the shipping sector are given the funds. The Minister wants to give the funds only to those who are genuine ship owners as opposed to portfolio carrying ship owners. We need to sift the wheat from the chaff. That is why government is embarking on a rigorous screening of the applicants”, he said.

In spite of Umar’s aide’s explanations, one thing is certain. Stakeholders, particularly indigenous ship owners, are tired of what an analyst described as the “endless wait” for the disbursement of the CVFF.

The question Umar and other government officials have failed to answer is how long it will take them to scrutinise the applicants. How many more months, nay years, will it take them to disburse the funds? And if it takes Umar years to screen the applicants, how long will it take him to do the actual disbursement?

According to the late business mogul and presumed winner of the 1993 presidential election, Chief M.K.O. Abiola, if it takes a man 5 years to practise madness, how many years will it take him to display the actual madness? If Umar is bereft of ideas on how to conduct due diligence on real Nigerian ship owners, let him ask for help.

He does not need to look far. Those in the shipping sector know themselves. They know the genuine ship owners. They know the portfolio carrying ones. They know those who do not own any ship but are present in every public forum saying they are ship owners. In any case, with the use of some selected commercial banks as PLIs in the last three years, knowing who to give the fund should not be an issue. He needs to be told that it is not rocket science.

In fact, prompt disbursement of CVFF to genuine Nigerian ship owners so that they can acquire brand-new ships, repair existing ones and create jobs for thousands of youths roaming the streets for non-existing jobs is the only way to fulfil the purpose of the enacting the Coastal and Inland Shipping Act 2003, which borrowed substantially from the Jones Act in the United States of America (USA).

Will Umar disburse the funds or continue to give excuses why he cannot do so while indigenous ship owners continue to live in pain and penury? Will he hearken to the demands of Nigerian ship owners, particularly ISAN that the funds should be disbursed immediately or continue to shift the goal post?

While waiting for the disbursement, can the minister tell the world how much has so far accrued into it from when it was established till date? Which banks are holding the funds and how much interest has accrued so far? It is public money and the public, especially stakeholders, need to know exactly what is happening to it.

Umar needs to be told that the non disbursement of the fund and continuous silence on the interest it has accrued so far has lent credence to the speculations in some quarters that the funds might have grown wings. The best way to shut up the mouths of those alleging that he has diverted the funds is to begin the disbursement to the eight applicants already selected by the PLIs without further delay.

Tags: Business, Nigeria, Featured, Cabotage, Fund

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