By Taiwo Scholarstica
Stakeholders have called for stronger credit assessments, legal due diligence and effective risk management to reduce lending risks associated with Nigeria’s Cabotage Vessel Financing Fund (CVFF), currently estimated at over $700 million.
This was the outcome of the Olisa Agbakoba Legal (OAL) maiden Maritime Policy Roundtable in Lagos.
The event opened with remarks by Yvonne Ezekiel, Managing Partner of Olisa Agbakoba Legal, who welcomed participants and stressed the importance of cooperation among financial institutions, maritime operators, lawyers and other stakeholders in addressing the challenges surrounding vessel financing.
Dr Olisa Agbakoba, SAN, Senior Partner at Olisa Agbakoba Legal, gave a historical overview of the CVFF and its place in Nigeria’s efforts to promote indigenous ownership and participation in the shipping sector.
He examined key developments in the country’s maritime policy, including the establishment of the Nigerian National Shipping Line and the enactment of the Coastal and Inland Shipping (Cabotage) Act 2003.
The Cabotage Act established the CVFF to support indigenous shipping operators in acquiring vessels and expanding Nigerian participation in domestic coastal trade.
Speaking on ways to de-risk lending under the CVFF, Collins Okeke, Partner at Olisa Agbakoba Legal, presented a legal and credit-risk framework designed to help participating financial institutions assess maritime finance risks, protect loan portfolios and reduce exposure to non-performing loans.
Okeke identified credit-risk assessment, corporate and regulatory due diligence, proper security and facility structuring, as well as clear default and recovery procedures as critical safeguards for sustainable CVFF lending.
He said banks should independently evaluate applicants’ financial capacity, existing obligations, operational experience and projected cash flow instead of relying entirely on information supplied by applicants.
The discussions also highlighted the importance of verifying beneficial ownership, regulatory compliance and the source of applicants’ mandatory equity contributions before approving financing.
Capt. Nicolas Bernard, AFNI, Managing Director of NBC Maritime Ltd., spoke on professional ship management and its role in protecting maritime investments and preserving the value of financed vessels.
He noted that acquiring a vessel was only the beginning, stressing that efficient operations were necessary to generate returns and maintain the asset’s long-term value.
His presentation covered technical management, preventive maintenance, crew management, regulatory compliance, procurement, financial oversight and digital monitoring as key aspects of professional ship management.
Participants also reviewed lessons from previous ship-financing initiatives, agreeing that the failure of the CVFF’s Series 1 lending window should be carefully studied to prevent similar challenges in Series 2.