Two Decades and Two Years Later: The Cabotage Vessel Financing Fund Finally Beams a Ray of Light

By Victor Ikenna Mgboji, Esq.

Introduction

The number twenty-two (22) holds unique symbolism. In numerology, it represents resilience, balance, and the potential for transformative change. It is also associated with luck and alignment—a fitting metaphor for the Cabotage Vessel Financing Fund (CVFF), created under Nigeria’s Coastal and Inland Shipping (Cabotage) Act of 2003, which is now set for disbursement 22 years later.

At a stakeholders’ conference held on May 12, 2025, at the prestigious Eko Hotel & Suites, Victoria Island, Lagos, Dr. Dayo Mobereola, the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), announced the Federal Government’s approval to disburse the CVFF through the Ministry of Marine and Blue Economy.

But what does this mean for Nigeria’s maritime sector and economy? To answer this, we must first unpack:

1. The Cabotage Act, 2003 and its objectives.
2. The CVFF’s purpose and structure.
3. NIMASA’s role in administering the fund.
4. The broader economic potential, especially under the African Continental Free Trade Area (AfCFTA).

(Key terms like “Cabotage,” “Cabotage Trade,” and “Coastal & Inland Shipping” are used interchangeably here.)

The Cabotage Act, 2003: A Protectionist Framework
The Act’s preamble is clear:
“AN ACT TO RESTRICT FOREIGN VESSELS IN DOMESTIC COASTAL TRADE, PROMOTE INDIGENOUS TONNAGE, AND ESTABLISH THE CVFF.”

The Act identifies three primary goals:

1. Restrict foreign vessels in domestic cabotage trade.
2. Develop indigenous tonnage (locally owned/operated ships).
3. Establish the CVFF to finance Nigerian ship acquisition.

It is also worthy of note that the Act hinges on four pillars of compliance. For a vessel to operate in Nigerian cabotage trade, it must:

• Be built in Nigeria (major hull/superstructure fabricated or assembled locally).
• Be wholly owned by Nigerians (citizens or companies).
• Be manned by Nigerian crew.
• Be registered in Nigeria.

Waivers:
The Minister of Marine and Blue Economy may grant exemptions (for a period not exceeding one year), but the Act’s protectionist intent remains paramount.

The Cabotage Vessel Financing Fund (CVFF): A Lifeline for Indigenous Shipping
Established under Section 42 of the Cabotage Act, the CVFF aims to:
“Provide financial assistance to Nigerian operators in domestic coastal shipping.”

It may be defined as a fund for financing the acquisition of Nigerian-built and -owned vessels engaged in cabotage trade.

For ease of understanding, it is germane to define some key words and terms:

• Cabotage Trade: Transport of goods/passengers between Nigerian ports (including inland waters, territorial seas, and the Exclusive Economic Zone).
• Nigerian Waters: Encompasses 853 km of coastline, 10,000 km of inland waterways, and a 200-nautical-mile Exclusive Economic Zone.

NIMASA’s Critical Role in CVFF Administration
As the agency overseeing Nigeria’s maritime development (per the NIMASA Act, 2007), NIMASA manages the CVFF in collaboration with Primary Lending Institutions (PLIs).

How Disbursement Works:

1. Applicant Contribution: 15% of the vessel’s value.
2. PLI Contribution: 35%.
3. CVFF Contribution: 50% (capped at $25 million).

It is pertinent to mention that the CVFF is a loan issued at a single-digit interest rate, with strict legal and financial criteria for eligibility.

The Bigger Picture: CVFF and Nigeria’s Economic Growth
The timing of the CVFF’s disbursement aligns with two critical trends:

1. Maritime Sector Potential: Nigeria’s vast waterways (10,000 km inland + 853 km coast) are underutilized. The CVFF could unlock the potential of the nation’s marine and blue economy, which has an estimated annual potential of $9 billion.
2. AfCFTA Integration: Indigenous shipping capacity positions Nigeria to dominate regional trade routes, reducing reliance on foreign vessels and retaining capital locally.

A Symbolic Turning Point?
If the number 22 truly signifies resilience and alignment, the CVFF’s activation after 22 years may mark Nigeria’s maritime renaissance—strengthening trade, creating jobs, and fueling economic diversification.

Conclusion and Call to Action
The CVFF’s disbursement is a long-awaited milestone, but its success hinges on transparent governance from NIMASA and the PLIs, strict adherence to Cabotage Act principles, and private-sector engagement to maximize its impact and potential.

Stakeholders must monitor implementation and advocate for policies that sustain this momentum. With the CVFF, Nigeria’s maritime future isn’t just bright—it’s within reach.

V.I. Mgboji, Esq. is a legal practitioner, maritime consultant, and the principal counsel of ARC Law Practice.
Email: vimgboji.arclawpractice@gmail.com