Uncertainties currently becloud the disbursement of the Cabotage Vessel Finance Fund (CVFF), over modalities, interest rates and the recent intervention by the House of Representatives putting a halt to any disbursement by the Nigerian Marítime Administration and Safety Agency (NIMASA).
The NASS directive, the back and forth on interest rate by the Primary Lending Institutions (PLIs) have being a source of concern to stakeholders who argued that the disbursement of the intervention fund may as well hit another snag and put an end to the presidential approval given for the disbursement of the funds.
This has also make it nearly impossible for the administration of President Muhammadu Buhari to disburse the fund before expiration of their tenure on May 29.
This was because while NIMASA was at the forefront of getting a favorable interest rates for the indigenous shipowners, the House of Representatives gave a resolution halting disbursement. Though, stakeholders have described the house’s intervention as purely advisory.
While intervening in the disbursement, the House of Representatives ordered the immediate suspension of the CVFF, thereby, asking NIMASA to present an audited statement of account showing all monies that have accrued to the Cabotage Vessel Finance Fund within seven days.
Adopting a motion of urgent public importance brought before the House by, Henry Nwawuba, the lawmakers also directed its Committee on Local Content to engage an external auditor to audit all contracts entered into in the cabotage regime and report same to the House within seven days.
The committee is also to commence immediate investigations into the CVFF to determine all monies that have accrued to the Fund since its establishment in 2003 and report to the House within 14 days.
The committee is also to commence immediate investigations into the Cabotage Vessel Finance Fund to determine all monies that have accrued to the Fund since its establishment in 2003 and report to the House within 14 days.
However, while the House of Representative was giving directive halting CVFF disbursement, the NIMASA DG, Dr Bashir Jamoh, was engaging PLIs on interest rate that would be favourable to indigenous shipowners.
The NIMASA helmsman disclosed that 8.5 per cent interest rate proposed by the Primary Lending Institutions (PLIs), was rejected because it was high.
Jamoh, said the agency would not allow the PLIs to impose unnecessary guidelines or interest rate on shipowners.
He said, “We are still discussing back and forth with the PLIs and unless we are sure we are getting the best deal that can help the stakeholders, we will never accept any PLI imposing unnecessary guidelines or interest rate. These are the core issue, the issue of interest rates will be dealt with and if we complete the issue of those grey area then we will disburse the fund before the end of the regime and if we didn’t finish when the new regime comes we will continue and they will advise us on the way forward but we don’t want to put any liability on the stakeholders or government.
“The remaining 15 per cent is what I say, we must get the best bargain for the stakeholders, we can’t accept any interest rate that will remain a burden on the stakeholders.
“The fund is 15 per cent contribution from the Shipowners, 50 percent from the government so if PLIs are to provide only 35 per cent they can’t come and impose high interest rate on the stakeholders. This is one of the grey area why we are going back and forth about,” Dr Jamoh stated.
He further disclosed that the agency is currently seeking alternative to the PLIs such as we development banks, to provide lesser interest rates.
“We are making contacts from other development banks to see how much they can give and put it on the table to know that eventhough they said they are giving this, development banks are bringing this because the PLIs from our guidelines are commercial banks so development banks are banks that can provide funding so we are consulting other banks to do peer review and after that, we will go back to the stakeholders.”
He continued, “For instance, last week, we reached certain milestones and had discussions with some of the stakeholders and the stakeholders think it’s (interest rate) not enough, we are going back to the drawing table to make sure that the interest rate we are accepting will favour all the stakeholders.
“The interest rate that is stalling disbursement as at the last time was 8.5 per cent but we still want it to go down, we want single digit and we are asking them to go down more.”
Speaking on the development, the pioneer president of Nigerian Shipowners Association (NISA), Chief Isaac Jolapamo, said indigenous shipowners won’t accept interest rate higher than 7.5 per cent.
According to Chief Jolapamo, “8.5 per cent rate from commercial banks for CVFF disbursement is on the high side depending on what individuals wants to use the money for.
“8.5 per cent is on the high side of single digit. What everybody is looking forward to is on the middle side of single digit, which is what is applicable elsewhere. When you say the first quarter of any amount by 10, it’s like you are talking about 25 per cent of 10 per cent, which is going to be a 2.5 per cent interest rate.
“The middle of the interest rate is 5, so we are looking at something around 7.5 per cent. The 8.5 per cent is on the high end of the interest rate calculation. It has gone past the three-quarter percentage of 10.
“For the CVFF disbursement, we should be looking at an interest rate between 5 per cent and 7.5 per cent. 8.5 per cent is okay if it is below 10, but the ideal situation will be based on what individual shipowners are doing with the money. What is the cash flow of each ship owner? These are the considerations that should be looked at when coming up with the interest rate for the CVFF.”
Also speaking, a former chairman, Nigeria Maritime Exhibition (NIMARAEX), Ayorinde Adedoyin, however, chided the shipowners for not speaking with a voice, saying that has been the bane of the sector.
He disclosed that the House of Representative resolution would have been triggered, saying acquiring assets doesn’t translate to making use of the asset through contracts, calling for enabling environment.
“It is a different thing buying and it’s another thing making the asset useful. If you have the asset without enabling environment to get business and part of it must be to take a look at that Cabotage, local contract must be enforced,” he said.
Speaking about the interest rate, Adedoyin said, “My own is not about the rate but who get the interest at the end of the day. Are the bank going to share the interest with the contributors because these money were contributed by shipowners but, who get the interest is it the bank or the custodian. These are the issues not explained and I don’t understand. These are the issues that needed to be looked at.”
