Calls for an independent audit of the Nigerian Maritime Administration and Safety Agency’s (NIMASA) accounts have emerged amid low transparency over the management of the Cabotage Vessel Financing Fund (CVFF), raising fresh questions about its whereabouts and financial status, 23 years after it was created.
Tajudeen Alao, past president of the National Association of Master Mariners (NAMM), said a comprehensive audit of NIMASA’s accounts from 2004 to date is needed to establish the actual status and volume of the fund, following claims by Temisan Omatseye, a former director-general of NIMASA, that dollar-denominated CVFF contributions were converted into naira during his tenure.
Omatseye explained to a summit by the Shipping Correspondents of Nigeria (SCAN) that when he assumed office in 2009, NIMASA’s funds, including the CVFF and three percent surcharge, were held in commercial banks which served as collection banks. They received funds into designated naira and dollar accounts on the 23rd of every month.
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“By virtue of a memo from the Accountant-General’s office, the agency was directed to change all foreign internally generated revenue, be it three percent or CVFF, into naira and fix it in naira,” he said.
The practice continued until he left office. As of December 13, 2010 when he left NIMASA, the agency had N52 billion in fixed deposits, comprising both the CVFF and the Maritime Fund.
“What has been the practice since the advent of TSA is better explained by NIMASA.” The Central bank of Nigeria (CBN) introduced the Treasury Single Account (TSA) in 2015 mandating agencies to close commercial bank accounts and move funds to the CBN.
NIMASA maintained that remittances are retained in their original currency without conversion.
“Funds remitted in United States dollars are retained in dollars with the CBN while funds remitted in naira are retained in the local currency,” the agency said in a statement.
Yet, obscurity over disbursement of the over $350m fund since its inception in 2003 has worried shipowners with a lot of patience but little capital. A sufficiently transparent account of its financial history has been lacking, with the last update on its volume dating back to 2023.
In January, the Ministry of Marine and Blue Economy created a portal to allow shipowners to apply for a part of the fund. 92 applications have been made since, but only one has successfully cleared assessment from NIMASA and banks, the Primary Lending Institutions (PLIs) so far. It is still awaiting final approval from the Minister.
Alao said the prolonged failure to disburse the CVFF has weakened indigenous participation in the shipping industry and even forced many operators out of the business.
“Our shipowners have the capacity, expertise and ambition to contribute meaningfully to the nation’s maritime economy,” Adewumi said, but “high financing costs, perceived investment risks and regulatory bottlenecks continue to limit our competitiveness,” he added.
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PLIs, to hedge against the risk they are to bear, request cargo guarantees from shipowners who have no ships to secure them, shipowners said. NIMASA denies this. Owners with vessels are locked out of the business by foreign operators with better funding options and trade history. Operators say poor enforcement of the cabotage Act that reserves coastal cargo for Nigerian-owned vessels has worsened prospects.
Alao called for cargo guarantees and ship-management capacity to be considered when assessing prospective beneficiaries, arguing that operators must demonstrate the ability to secure cargo, manage vessels and repay loans obtained from the fund.
Bethel Olujobi is the Trade Correspondent at BusinessDay. He brings scarce insight into Nigeria's maritime policies and the changing currents of global commerce defining the country's position in international trade. Before this, he reported on foreign relations, migration and sports for BusinessDay. He holds a Bachelor's degree in Mass Communication, and is an alumni of the CNN Academy and the Financial Times News School. He is certified by Reuters and Google. He is based in Lagos, Nigeria. For pitches, email: [email protected]
