Olubowale Advocates Cargo Linked, Trade-Driven Approach to CVFF

.Says $25m Facility Can Support Vessel Acquisition Backed by Viable Trade Contracts

A foremost Nigerian shipowner and former Chapter President of the African Shipowners Association (ASA), Captain Ladi Olubowale, has called for a cargo-linked and trade-driven approach to the disbursement of the Cabotage Vessel Financing Fund (CVFF), saying vessel acquisition should be based on identifiable commercial opportunities.

Speaking at the Maritime Reporters Association of Nigeria (MARAN) Roundtable, Olubowale said the success of the CVFF should be measured by its ability to facilitate the acquisition of vessels that are deployed on viable trades and backed by cargo contracts.

He stressed that ship financing must be connected to the business the vessel is expected to undertake, noting that guaranteed cargo and long-term trade contracts provide the revenue required to operate vessels and repay financing. “Nobody buys ships without a trade,” he said.

Olubowale said the Nigerian Maritime Administration and Safety Agency (NIMASA) had indicated that applicants could provide about $3.7 million in equity to access financing of up to $25 million, but emphasised that the key consideration should be the trade for which the vessel would be acquired.

“NIMASA wants you to bring out $3.7 million in order for you to be able to attract $25 million. They will now look at it in your own case. What trade will you be using that for?” he asked.

He explained that different vessel categories serve different cargo segments, including dry bulk, cement and liquid cargo, stressing that Nigeria must first determine the cargo available and the vessels required to move them before approving financing.

According to him, a $25 million facility could be sufficient to acquire a sizeable vessel where the operator has a one- or two-year contract guaranteeing cargo.

He said the revenue from such contracts could provide the cash flow required to service the financing, making vessel acquisition commercially viable and reducing the risk to lenders.

The shipowner therefore called for a strategic fleet analysis to determine the types of vessels Nigeria requires across its various cargo segments and how the CVFF can be deployed to address those gaps.

Olubowale further said that the estimated $700 million available in the CVFF represented an opportunity to develop a national fleet covering both dry and liquid cargo sectors, if the fund was strategically deployed.

He argued that the fund should not be viewed simply as money for individual ship purchases, but as a mechanism for building sustainable indigenous shipping capacity and increasing the participation of Nigerian-owned vessels in the country’s maritime trade.

The maritime expert, who disclosed that his company had applied for the CVFF, said several banks had approached the company with term sheets outlining equity contributions and other financing requirements.

He said the development showed growing interest in CVFF-backed vessel financing, but maintained that the commercial viability of the proposed vessels remained critical.

He also urged the government to focus on creating an enabling environment, while private-sector operators and shipping professionals drive vessel ownership and fleet development.