Naira conversion has eroded $700m CVFF value, says Omatseye

Former NIMASA Director-General Temisan Omatseye has said the $700 million Cabotage Vessel Financing Fund (CVFF) is no longer held in dollars but in naira, leaving its value exposed to exchange rate depreciation. He spoke at the 2026 Annual Summit of the Shipping Correspondents Association of Nigeria (SCAN) in Apapa, Lagos.

Why the fund was converted

Omatseye, a shipowner and Chairman of the 2026 summit, said the decision to convert dollar receipts into naira was driven by higher domestic interest rates. The summit theme was "Low-Risk Capital for Indigenous Shipowners: Overcoming Regulatory and Financial Bottlenecks."

He said Nigeria’s interest rates stood at 23 per cent, 24 per cent and 25 per cent at the time, while dollar-denominated investments offered about one to two per cent. "Interest rate at that time was quite high, 23 per cent, 24 per cent, 25 per cent. And interest rate in dollars was about one or two per cent. Dollar interest rate is very, very low internationally.

"So we could easily have kept the money in the dollar and just ended at one or two per cent interest rate. But for a reason best known to them, they said we cannot hold the money in dollars.

"They said because we are earning better interest rates in naira, every time we receive the money in dollars, we converted it to naira and earned a better interest rate on it."

He said the fund was swept into naira accounts. "But at the time, every last week of the month, when we do a sweep, we collect dollars, automatically change it to Naira. And all the money is placed in Naira. And then whatever Naira is at the date of exchange with us at that time.

"So if the exchange rate is $1,350 today, whatever Naira is there is what you exchange that. So you cannot be looking at $700 million as of 2019 to be the same $700 million today, because the money is held in Naira."

2023 depreciation and the value question

Omatseye said the naira depreciation in 2023 changed the financial implications, making it difficult to equate the naira balance with the original dollar value. "So every money collected in CVFF of three per cent is converted to naira, which was okay because we were earning 25 per cent. Guess what happened in 2023? Naira depreciated. So you cannot expect the naira we had at $179 at that time, which was $700 million, to be the same today," he said.

He urged stakeholders to separate the historical dollar valuation from the value of the naira-denominated funds at prevailing exchange rates. He said the naira balance would have to be converted at the current rate to determine its dollar equivalent, rather than relying solely on the original $350 million figure.

"When you guys speak of $700 million, CVFF is not held in dollars. It’s in naira, and at the present exchange rates, keep your realistic eye," he said. He added that any increase in the fund’s nominal value would need to be established through verifiable records.

Disbursement push

Minister of Marine and Blue Economy Adegboyega Oyetola said he ordered NIMASA to fast-track disbursement of the CVFF to strengthen indigenous shipping capacity. Oyetola, represented by the Director, Media, Ministry of Marine and Blue Economy, Mrs Anastasia Ogbonna, said President Bola Tinubu’s administration is committed to strengthening indigenous participation, retaining maritime value within the economy and creating sustainable employment for Nigerians.

He said the government recognises the difficulty indigenous operators face in obtaining long-term financing, as vessel acquisition requires substantial capital amid high borrowing costs and stringent collateral requirements.

The CVFF is a maritime financing scheme meant to help indigenous shipowners acquire vessels and expand capacity in coastal and inland shipping. For operators, the debate matters because access to affordable, long-term vessel financing remains a key constraint, while the currency exposure of the fund affects how much can be disbursed.