CVFF: $25m Can Finance Vessel Acquisition With Guaranteed Trade – Olubowale

A former President of the African Shipowners Association, Captain Ladi Olubowale, has said the success of the Cabotage Vessels Financing Fund should be measured by the trade opportunities it creates for Nigerian shipowners, rather than simply by the amount disbursed.

Olubowale said a $25m facility under the CVFF could be enough to finance the acquisition of a sizeable vessel, provided the funding is tied to identifiable cargo and secured long-term trade contracts.

He made the remarks on Tuesday in Apapa during a roundtable meeting with members of the Maritime Reporters Association of Nigeria.

According to the shipowner, the availability of cargo and guaranteed contracts would enable operators to deploy financed vessels profitably, generate revenue and repay the loans.

“The success of the CVFF should not be measured simply by the amount available to individual shipowners, but by how effectively the funds are linked to actual trade opportunities,” Olubowale said.

Match vessels with available cargo

Olubowale stressed that vessel acquisition should be driven by commercial opportunities, arguing that the first question before approving financing should be what trade the vessel is expected to serve.

He said Nigeria must first identify the volume and type of cargo available before determining the vessels required to move them.

He cited dry cargo, cement and other commodities as examples of trades that require specific types of vessels.

According to him, financing vessel purchases without establishing the commercial demand for the vessels could undermine the objectives of the CVFF.

Olubowale said a properly structured $25m facility could support the acquisition of a vessel designed for a specific trade, particularly where a one- or two-year contract guarantees cargo.

He explained that revenue generated from such a contract could then be used to service and repay the financing, making the investment commercially sustainable.

$700m fund could support national fleet

The shipowner also argued that the CVFF should form part of a broader national fleet development strategy rather than being treated merely as a source of individual loans to shipowners.

He said that with an estimated $700m in the fund, Nigeria could develop a national fleet capable of serving different cargo segments if the money is strategically allocated and managed with adequate industry expertise.

Olubowale further noted that many shipping opportunities do not necessarily require enormous capital outlays, particularly where operators can provide an equity contribution and secure sufficient trade to support repayment.

Banks showing renewed interest

Olubowale disclosed that several banks had approached his company regarding the CVFF, with some presenting term sheets detailing financing requirements, including equity contributions and other conditions.

He said the development represented a significant shift from previous years, when shipowners frequently complained about difficulties and delays in accessing the fund.

He maintained that the priority should now be to ensure that the CVFF delivers measurable economic benefits by expanding Nigeria’s indigenous shipping capacity and enabling local operators to capture a larger share of the country’s maritime trade.

Only 20% of applicants reportedly eligible

The comments come amid ongoing efforts to deploy the CVFF to Nigerian shipowners.

In July, The Guardian reported that only 20 per cent of 70 applicants had successfully met the eligibility requirements and were undergoing the relevant processing, 136 days after the CVFF portal was officially launched.

For Olubowale, however, the ultimate test of the fund will not be the number of applications approved or the amount released, but whether the financing results in vessels actively engaged in viable trade and capable of generating sustainable returns.

The objective, he suggested, should be simple: link the money to cargo, link the cargo to vessels, and link the vessels to sustainable trade.