Agbakoba: Cargo Guarantees, Not Government-Funded Vessels, Key To Indigenous Shipping Growth

By Samuel Egbewole

A maritime lawyer, Mr Olisa Agbakoba (SAN), has urged the Federal Government to prioritise cargo guarantees, bankable contracts and regulatory certainty as the foundation for developing Nigeria’s indigenous shipping industry, rather than relying on public funds to finance vessel acquisition.

Agbakoba made the call on Thursday in Lagos at the annual summit of the Shipping Correspondents Association of Nigeria (SCAN), themed “Low-Risk Capital for Indigenous Ship Owners: Overcoming Regulatory, Financial Bottlenecks”.

He was represented at the event by another maritime lawyer, Mr John-Paul Akunne.

Agbakoba said the theme addressed the need to transform Nigeria’s maritime potential into a commercially viable indigenous shipping industry capable of retaining a greater share of the country’s freight earnings.

He observed that despite Nigeria’s substantial cargo volumes, indigenous shipowners continued to struggle with limited access to financing and dependable commercial opportunities.

According to him, developing a national fleet would enable the country to retain more freight earnings, create employment for seafarers, strengthen ship management and repair services, and increase Nigeria’s participation in domestic, regional and international shipping.

He, however, cautioned that fleet development went beyond acquiring vessels, stressing that commercially viable ships, competent operators, reliable cargo demand and sustainable financing were essential to building a competitive industry.

Addressing the financial risks associated with shipping investments, Agbakoba identified vessel valuation, foreign exchange fluctuations, insurance, operating expenses and freight rates as critical considerations that must be managed through proper legal, technical and financial due diligence.

He said lenders must conduct thorough checks on vessel ownership, registration, mortgages, insurance coverage and regulatory compliance, as well as assess borrowers’ capacity to repay loans.

He identified ship mortgages, guarantees and the assignment of charter earnings and insurance proceeds as appropriate forms of security that could protect lenders.

However, the maritime lawyer stressed that collateral alone could not make an unviable shipping project bankable, insisting that vessels must have dependable revenue streams supported by enforceable cargo or charter contracts.

The former President of the Nigerian Maritime Law Association maintained that guaranteed cargo was central to shipping investment, noting that vessels without reliable employment opportunities would struggle to attract financing.

He therefore urged major oil companies, terminal operators and other cargo owners to engage qualified Nigerian shipowners through commercially viable contracts that clearly specify cargo volumes, contract duration, freight rates, performance standards and payment obligations.

On the regulatory framework, Agbakoba said the Coastal and Inland Shipping (Cabotage) Act, 2003, and the Nigerian Oil and Gas Industry Content Development Act, 2010, provided the legal basis for expanding indigenous participation in shipping and oil and gas operations.

He called for stronger enforcement of the laws, transparent administration of waivers and improved access to cargo for local operators.

Agbakoba also identified regulatory uncertainty as a factor driving up investment costs, calling for stronger coordination among the Nigerian Maritime Administration and Safety Agency (NIMASA), the Federal Ministry of Marine and Blue Economy, the Nigerian Ports Authority (NPA) and the Nigerian Ports Economic Regulatory Agency (NPERA).

On the Cabotage Vessel Financing Fund (CVFF), he acknowledged its importance but maintained that it should complement commercial lending, development finance and private sector investment rather than serve as the sole source of funding for indigenous shipping development.

He called for transparent eligibility requirements, rigorous credit assessment, adequate collateral and effective monitoring to ensure the fund supports viable shipping projects.

To achieve sustainable fleet development, Agbakoba outlined six priority measures: cargo-backed financing, improved access to cargo, regulatory coordination, mobilisation of private capital, stronger maritime capacity and an implementation framework with clear timelines and measurable outcomes.