By Steve Agbota, [email protected]
In 2024, Nigeria’s maritime sector faced a litany of challenges that threatened to stifle its growth and efficiency. The ongoing forex crisis created financial strain, while a sharp decline in importation further weakened the sector.
To worsen the narrative, soaring port charges drove up operational costs, compounding the difficulties for businesses and stakeholders.
Despite contending with a combination of economic and logistical hurdles, the sector struggled to stay afloat and retained its place as the gateway to the nation’s economy.
Today, the condition of the nation’s ports has become a critical concern for those operating within them, particularly freight forwarders and other port users. Government policy inconsistencies, outdated infrastructure and various other challenges are severely hindering the efficiency and effectiveness of Nigeria’s maritime sector.
The importation of bulk cargo has declined by 15%, vehicle imports by 55%, and containerised cargo by 35%. This downturn has led to the closure of hundreds of businesses, while thousands of Nigerians have lost their jobs, largely due to soaring exchange rates and increased import duties on cargo clearance at the country’s seaports.
Daily Sun gathered that following President Bola Tinubu’s move to float the exchange rate, the value of the naira has skyrocketed by over 300%, with the exchange rate for the U.S. dollar jumping from N455/$1 to N1,766/$1 in just one year.
Key factors driving these trends include the soaring exchange rate, scarcity of dollars, fluctuating exchange rates, constant hikes in Customs duties, a decline in importation, and rampant multiple taxation. These, coupled with other external challenges, have collectively stunted the growth of the maritime industry in 2024.
Other external factors limiting the sector’s growth include the absence of rail connectivity for intermodal transport and the lack of effective enforcement of maritime policies, which have posed major setbacks for the industry. Moreover, issues such as poor access roads to seaports, the absence of holding bays and quays, insufficient truck parks, and inefficient traffic management, particularly at the nation’s busiest ports in Lagos, have compounded the challenges facing the maritime sector.
The Ministry of Marine and Blue Economy, after one year of existence, is still struggling to establish its footing and has yet to meet the expectations of stakeholders. While there has been progress in revenue generation, with Customs exceeding its targets ahead of schedule, the industry continues to face significant challenges that remain unresolved.
Security challenges, including cargo theft and widespread lawlessness, continue to plague Nigerian ports, significantly disrupting operations and driving up shipping costs, according to the Nigerian Shippers Council. As a result, many importers have sought refuge in neighboring countries to continue their businesses, leading to a daily loss of cargo for Nigeria. This shift has caused widespread job losses and business closures, particularly among small and medium enterprises, exacerbating the cost-of-living crisis. The situation puts maritime sector jobs and investments at risk, further eroding investor confidence.
This approach has significantly contributed to the rising costs of goods and the escalating prices of food in Nigerian markets.
As a result, stakeholders who spoke with Daily Sun have described 2024 as a particularly tough year for the maritime sector.
Daily Sun also learned that the Federal Government’s failure to disburse the $700 million Cabotage Vessel Financing Fund (CVFF) to indigenous shipowners has further hindered the shipping industry in 2024.
Currently, Nigeria remains reliant on international shipping lines to transport its crude oil, costing the nation over $10 billion annually due to the lack of indigenous shipping lines.
In an interview with Daily Sun, Dr. Kayode Farinto, the former President of the Association of Nigerian Licensed Customs Agents (ANLCA), stated that both the maritime industry and the Ministry of Marine and Blue Economy have fallen short of expectations. “I have said it to everyone that the Ministry of Marine and Blue Economy has not done well. If I want to give the pass mark, I can’t give them more than 25 per cent. There are many things that are left undone.
“We saw a lot of things before we advocated that the ministry of blue economy should be created but I have not seen any changes for now because the industry is just stagnated. Nothing is moving. That is my perspective, I may be wrong but that is my perspective,” he said.
According to him, the maritime industry is supposed to move farther than this, saying the industry is working at the speed of snail while any maritime domain now in the world is working at supersonic speed.
He noted that the global maritime industry is witnessing numerous developments, highlighting discussions on passports and other important matters.
“We are not getting it right. Ordinary consolidators holding everybody to ransom. Arbitrary charges here and there. Even the Ministry of Blue Economy, we have not done delineation. There are some departments in the Ministry of Transportation now. I think they report to two ministers now. Are we moving forward? And that ministry has celebrated one year.
“I have not seen us moving forward. And that is very, very disheartening. A lot of things are wrong with us. And we are losing cargo to neighboring countries on a daily basis, as a result of this, we lose cargo to Cotonou and Cote d’Ivoire. If I start talking from now till tomorrow, honestly, I will continue to talk. But I want to tell you that I’m not happy because the industry is not moving forward. The industry is stagnated.
A shipping expert and the Managing Director/Chief Executive Officer, Kamany Marine Services Ltd, Charles Okerefe, queried why Nigeria is still paying the international insurance companies so much despite improving in the area of maritime crimes.
“Well, the last time I checked, Nigeria still remains a member of the International Maritime Organization (IMO). As a matter of fact, we are seeking an election into class C.
“Very good, at the moment. So, the question is, how well have our representatives at the IMO pushed to reverse that trend?
“We have representatives at the International Maritime Organization, which is a leading body for maritime entities around the world. Now, even the former IMO Secretary General, when he came to Nigeria, he acknowledged that our waters have become safer than it used to be especially from the COVID period, there has been a remarkable improvement. So, it is our representatives at the IMO that should push for the reversal of issues like water insurance.
“We also have the Ministry of the Marine and the Blue Economy. What efforts are they making to reach out to the international shipping community to reverse the trend of charging war risk on vessels and cargoes that are coming to Nigeria? I think it lies within the purview of our representatives at the IMO,” he said.
He further stated that the Nigerian Maritime Administration and Safety Agency (NMASA) should reach out to ship owners and the international shipping community to assert that Nigeria no longer deserves to be penalized with war risk charges, as the nation’s waters are now safe.
“And our ports have improved to a large extent. So, it is where you have issues in the maritime domains that war risk insurance should apply. At the moment, in Nigeria and the Gulf of Guinea region, there has been a lot of quiet.
“So, for now, there should be concerted efforts, not only by the Ministry of the Marine and the Blue Economy, the NPA, NMASA, but also our representatives at the IMO to push for a reversal of the charging of war risk insurance on our Nigerian-bound cargoes,” he said.
Meanwhile, the National President, National Council of Managing Director of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, said there has been a setback in the maritime sector, and it is a very big setback.
“Even though we are talking about trillions in the exchange rate, the exchange rate triggered the money to that trillions, that is the truth. So, the revenue collected is something different from the way people are suffering. The sector actually has not seen anything different.
“The sector actually has been bedeviled with a lot of procedures that are not internationally based. Last year, the government promised that there’s going to be cheap food. They issued a circular and said, this food will come in by November and December.
“As at this time, a bag of rice is one of the most expensive items. So, where is the cheap food from the government, from that circular? All those things that were identified, we expect the president to ask the minister some questions.
“Hunger is high in the city. When you buy a bag of rice for almost N100,000 and something, it is above minimum wage. And the maritime sector is supposed to have relief, if they have released those goods, we should have got some bag of rice. Whereby, rice should have gone as far as N30,000 per bag or N20,000 per bag. But people are running under a very serious policy misdirection.
“Because you issued a circular and said, the government is giving relief on food, on rice, on some items and those items are extremely expensive, more than expensive in circulation. So, it is negative when you look at the whole thing that is happening,” he explained.
He said the other aspect is the exchange rate, which has actually affected a lot, saying people are no longer bringing goods into the nation’s ports.
“When you look at the throughput, it is low. But because of the exchange rate, you have this multiplicity of revenue that actually is being affected by exchange rates. So, we find out that there is a problem. And the marine economy, we have not seen anything from there. It is almost going to be two years now, this government, by May, it will be two years. So, the marine economy, like I said, we have not seen anything from there,” he said.
A Nigerian ship owner and the current president of the Nigerian Chamber of Shipping (NCS), Aminu Umar said 2024 has been a very interesting year though it came with its challenges.