Shippers and business owners in the maritime industry have raised their voices against the prevalent economic challenges that have led to a drastic decline in cargo throughput at the nation’s ports.
Findings revealed that the once bustling Lagos seaport trade hubs now face a significant slowdown, with rising costs, unfavourable exchange rates, and other impediments leaving stakeholders grappling with the profound consequences of a shrinking maritime economy.
Shipping Position Daily recalls that the Comptroller General, Nigeria Customs Service (NCS) Adewale Adeniyi, while presenting the Service’s 2024 budget told members of the Senate Committee on Customs and Excise that there has also been a 30 percent fall in the volume of cargo that is imported into Nigeria.
Adeniyi however suggested that even though it is the mandate of the Central Bank of Nigeria (CBN) to fix the exchange rate of the Naira vis a vis other currencies, there is need for a meeting point for authorities of government in charge of monetary policies and those in charge of fiscal policies.
Our correspondent who went round Lagos ports last week observed that there is a sharp decline in the volume of cargo imported as some of the terminals were scanty with less operation. For example, the PTML RoRo terminal at Mile Two is totally deserted as the large expanse of space often occupied by various cars and automobiles is now very free like a football pitch.
Similarly, our correspondent observed that few container cargo trucks as low as five to 10 trucks leave the Apapa and Tin Can ports gate per hour, unlike the ever busy traffic of trucks going in and out of the port.
In a chat with our correspondent, a shipper and member of the Board of Trustees of the Shippers Association Lagos State (SALS), Rev Nicodemus Odolo highlighted a significant policy shift where duty computation is now based on the current exchange rate rather than the rate at the time of placing orders. This shift according to him has led to a substantial increase in the cost of importing goods, making it challenging for businesses to maintain profit margins.
Odolo revealed that the exchange rate has skyrocketed, reaching about N1,600 to one US dollar, compared to the previous rate of just above N400. He said the consequence is a drop in cargo throughput, as importers struggle to remain profitable.
Additionally, Odolo noted that some knowledgeable market players are opting to exit the country, redirecting their cargo to neighboring countries with more favorable economic environment. He lamented that the cost of goods in Nigeria far exceeds that of neighboring countries like Ghana, stating that goods that cost $35,000 in Nigeria will only cost $4,000 in Ghana.
“From the look of things, the cause of drop in cargo throughput has to do with the situation we find ourselves in Nigeria particularly the problem of exchange rate. Those days, the policy the government had in place was that the exchange rate in the form of M while placing orders is what is used in duty computation. But now, the reverse is the case. They are computing duty on the current exchange rate and the exchange rate has gone wild and crazy.
“The cost of doing business in Nigeria is just too high and unbearable. The cost of goods that will cost you 35,000 US dollars in Nigeria, will cost you only $4,000 in Ghana. You can see the gap. So every manufacturer and business exists in the country” Odolo noted.
On his part, an Importer and business owner at the Alaba International Market, Mr Emmanuel Arinze highlighted the glaring issues contributing to the decline in cargo throughput. He pointed to a substantial decrease in both importation and local production, attributing this to exorbitant costs associated with importation, clearing, and forex.
According to Arinze, the current exchange rates and operational costs make it increasingly difficult for businessmen to import goods at previous volumes. The ripple effect includes a decline in purchasing power, leading to reduced sales and increased costs of goods.
“The reasons are very obvious, there is a serious drop in the importation, not just importation, but also in local production because the cost of importation, clearing and Forex is too high. With the current exchange rates and the cost of operation, you may not be able to import half of the number of containers you have been importing before now. The purchasing power of the masses have dropped and there a serious drop in sales because the cost of good keep going up on daily basis.
On his part, another importer and business owner at Alaba International Market, Evangelist Paulinus Ugochukwu also called for a review of policies, advocating for a more reasonable exchange rate for imports and discouraging the exportation of raw materials for foreign exchange.
According to Ugochukwu, addressing these issues is crucial for businesses to survive and thrive in the challenging economic climate.