How Nigeria can build sustainable indigenous shipping sector – Agbakoba

By Gboyega Oni

A Senior Advocate of Nigeria (SAN), Dr. Olisa Agbakoba, has proposed that Nigeria does not need the government to finance every vessel but a system that creates cargo certainty, bankable shipping contracts and regulatory confidence to attract private capital.

Olisa Agbakoba made this proposition in a lead paper he presented at the 2026 Annual Summit of the Shipping Correspondents Association of Nigeria (SCAN) in Lagos on Thursday, October 29.

The theme of the conference was “Low-Risk Capital for Indigenous Shipowners: Overcoming Regulatory and Financial Bottlenecks.”

Agbakoba, who was the guest speaker at the conference, said despite Nigeria’s enormous cargo volumes and oil and gas activities, indigenous shipowners continue to face limited access to finance and dependable commercial opportunities.

Agbakoba, a Senior Partner at Olisa Agbakoba Legal, posited that a Nigerian national fleet could retain more freight earnings within the economy, create jobs for Nigerian seafarers, strengthen ship management and repair services, and expand Nigeria’s participation in domestic, regional and international shipping.

The guest speaker, however, noted that fleet development requires more than vessel acquisition. “It demands commercially viable vessels, competent operators, dependable cargo demand and financing structures capable of generating sustainable returns,” said he.

On making maritime finance bankable, he said “maritime finance involves risks relating to vessel values, technical condition, foreign exchange, insurance, operating costs, fluctuating freight rates and cross-border enforcement. These risks can be managed through comprehensive legal, technical, commercial and financial due diligence.

“Before financing a vessel, lenders must verify ownership and title, registration, existing mortgages and encumbrances, insurance, regulatory compliance, vessel condition and the borrower’s capacity to operate profitably.

“Appropriate security may include registered ship mortgages, guarantees, assignments of insurance proceeds and charter earnings, share charges and cash-flow arrangements.

However, security alone cannot make an unviable project bankable. The vessel must have a credible revenue source, supported by enforceable cargo or charter contracts, reliable counterparties and sufficient cash flow to service the loan.”

Agbakoba said certainty of cargo and regulations is critical in shipping and the foundation of a national fleet. “The availability of cargo is central to indigenous ship ownership. A vessel without dependable employment will struggle to secure financing, while a vessel supported by credible cargo commitments presents a stronger investment proposition.

“The Cabotage Act 2003 provides a framework for promoting Nigerian participation in domestic coastal and inland shipping, while the Nigerian Oil and Gas Industry Content Development Act 2010 supports Nigerian content within the oil and gas industry, subject to their applicable provisions.

“Effective enforcement, transparent administration of waivers and practical access to cargo are essential. Major oil and gas companies, terminal operators and other cargo owners should engage qualified Nigerian shipowners through commercially viable contracts.

“These contracts should provide clear terms on cargo volumes, duration, freight rates, performance, payment obligations and remedies for breach. Lawful cargo reservation and rights of first refusal may also be considered where consistent with applicable legal and regulatory obligations.”

On regulatory certainty and the The Cabotage Vessel Financing Fund CVFF, Agbakoba said “Regulatory uncertainty increases investment costs and discourages long-term financing. Nigeria therefore needs consistent enforcement, transparent procedures, clear institutional responsibilities and predictable administration of applicable waivers.

“The Cabotage Vessel Financing Fund (CVFF) remains an important instrument for supporting indigenous vessel ownership, but fleet development cannot depend principally on public financing.

“The Fund should complement commercial bank lending, development finance, private investment and cargo-backed financing. Its administration requires transparent eligibility criteria, rigorous credit assessment, appropriate collateral, clear risk allocation, effective monitoring and recovery arrangements.

“Public financing should support viable projects and mobilize private capital, not substitute for a functioning commercial shipping market.”

Towards building a sustainable Nigerian shipping industry, the Senior Advocate of Nigeria proposed these practical actions for Nigerian government to do:

Develop cargo-backed vessel financing by bringing cargo owners, shipowners and lenders together to structure commercially viable contracts.

Improve indigenous access to cargo through effective implementation of applicable Cabotage and local-content requirements and consideration of lawful cargo reservation mechanisms.

Strengthen regulatory coordination and establish clear, consistent administrative procedures.

Mobilize private capital through appropriate financing structures supported by credible revenue, enforceable security and clearly allocated risks.

Strengthen domestic maritime capacity in vessel management, ship repair, technical services and seafarer development.

Establish an implementation framework identifying priority vessel categories, cargo sources, financing partners, responsible institutions and measurable timelines.

“These actions require sustained collaboration among Government, regulators, cargo interests, financial institutions and indigenous shipowners.

“The government should provide regulatory certainty and enforce applicable laws. Cargo owners should provide credible commercial opportunities. Banks and investors should finance viable projects, while shipowners must demonstrate equity commitment, technical competence and operational efficiency.

“NIMASA is well positioned to convene these stakeholders and lead a structured engagement that produces practical commitments and measurable outcomes. SCAN also has an important role in sustaining public awareness, informed debate and accountability,” he submitted.

On the role of banks and private investors, he said “Banks and institutional investors must become active partners in developing Nigeria’s National Fleet. This requires specialized maritime credit expertise, reliable vessel valuations, technical assessments and sound legal advice on ship mortgages, charter contracts, insurance and cross-border enforcement.

“Financing should be tailored to each vessel’s commercial circumstances. A vessel supported by a credible long-term charter contract carries a different risk profile from one dependent on uncertain spot-market earnings.

“Commercial banks, development finance institutions, insurers, private investors and export credit agencies should explore appropriate combinations of debt, equity, leasing, guarantees and other financing arrangements.

“The focus must shift from simply seeking money to acquire vessels towards developing viable transactions that connect cargo demand, suitable vessels, credible operators and willing financiers.”