Ilori advocates using CVFF for establishment of Maritime Development Bank

Engr. Emmanuel Ilori

Marine Engineer,  Mr. Emmanuel Ilori, has urged the Minister of Transportation, Mr. Rotimi Amaechi, to commit the Cabotage Vessel Financing Fund (CVFF) to establishing a maritime development bank, rather than disburse the funds to individuals.
Recall that the minister recently told a gathering of maritime stakeholders in Lagos that the CVFF would be disbursed come January 2020.

The fund, which was established in 2003, is a pool from collections made by vessels involved in coastal trade, and now estimated to be about $200 million. 

Ilori, who has years of experience working on global platforms and significantly with the Lloyd’s Register, stated that the fund would not give the expected value if disbursed, because it would barely purchase reasonable number of vessels and argued about who would be considered or not.

“I need to be really honest with you. My position on CVFF is, it is good. It is a good source of funding. But, how many vessels will $200 million buy? Who is going to benefit from that purchase? How are we going to use that $200 million to develop the maritime industry? It is capital intensive. So, if you give it to A, B is going to complain. What are we going to use the CVFF to buy? 

"There are so many areas of need that require funding. Once you deplete the $200 million, what happens next? That is why some of us are now saying that why don’t we pull back and think out of the box how to invest the $200 million so that it can stretch farther?

“One of the areas is why don’t you set up a maritime development bank, use the fund as a seed money to develop the industry, so that people who have sound bankable maritime business can access the fund,” he said.

According to Ilori, a maritime development bank would enable the industry address a number of industry interest, including upgrading of shipyards, where specific crafts could be built, thus creating more jobs locally.

He said: “So, we will not only be developing ship purchase, the need for us to invest in ship repair, then, other areas of need that we can holistically develop the industry instead of dishing out the money to a few lucky people.

“That is the area we need to look out for, because we are not the only nation that has developed its maritime industry using the maritime development bank route. So, it is something we need to look at again and say how we use that fund constructively to develop the industry.

“And I don’t think sharing it among a few people is the best way. I think the Minister raised this in the past that he is not inclined to share the money among people. Let us talk of the Ship Acquisition Fund of the past given to people. How were they able to recover it?  It went down the road.

“But, in terms of the CVFF, what we are advocating is that what are the genuine maritime needs of Nigeria?  I could then use that money to develop to meet the maritime needs of our nation.”

He argued that the establishment of a maritime development bank would drive investment interests, making it less difficult to have ship-building companies come to set up businesses in Nigeria.

“What sort of ships do we actually need within Nigerian waters? If we can then determine the vessel needs of Nigeria, you can then use that fund though a development arrangement , to say ok, we will invest this money in developing so number of vessels to be built in Nigeria, invite  the ship building company to come and set up in Nigeria.

“These are the number of types of vessels that we need for trade in our waters. Over time, development bank will be providing excess to be guarantee. So, we can see the industry booming. But at the moment, it is going to be a close shop, which is not going to benefit anybody.”

He decried the fact that interest on loans for such capital-intensive business as shipping stood at a double-digit of over 20 per cent, which makes access to funds a big issue.

He said: “These are all business needs. Nigeria has vast maritime needs, but of course, access to funding is an issue. At the moment, funding at over 20 per cent is not just viable. That is why we are saying we need to revisit the issue of access to funding issue. 

“That is why we are advocating that if you use the CVFF as the seed money for the maritime development bank where people can access fund at a very low rate, it will not only attract local investors , it will attract foreigners investors to actually come and invest in Nigeria.

“It will improve our FDI, because Nigeria is a country of opportunity. At over 200 million people, we have huge opportunities. Then, we will continue to have huge maritime needs, not only on the short sea trade, but even within the inland waterways system.”

Ilori is convinced of many business opportunities opening up if and when they have better access to funding from a place like a maritime development bank.