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Apapa Gridlock: Port Users’ Costs Rise by 400%

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  • Apapa Gridlock: Port Users’ Costs Rise by 400%

The cost of doing business for port users has risen by 400 per cent and stakeholders have estimated that N1.5bn is being lost daily on transportation, storage charges and container deposits to delays in cargo evacuation at the ports.

Our correspondent gathered from freight forwarders and owners of cargoes that whereas the charge for transporting a 40-foot container from the port to any destination within Lagos was N40,000 a few weeks ago, it had recently gone up to N200,000.

The cost is not the same for containers going outside Lagos, which has increased from about N60,000 to around N300,000.

“The fares have increased because it takes the vehicle owners up to four days to pick up the containers,” the Chairman, National Association of Government Approved Freight Forwarders, Dr. Boniface Aniebonam, told our correspondent.

The NAGAFF Chairman noted that the amount of loss to stakeholders was huge and could not be properly quantified.

According to him, for overtime containers, the storage charge per day is about N15,000, and if one has about 20 containers, the person would be spending 300,000 every day.

He said the situation had been very frustrating for port users.

“There is a huge amount of time lost and time is money. I have pending business at the port but I cannot go there because I cannot climb a motor bike at this stage in my life,” Aniebonam stated.

The Coordinator of the Save Nigeria Freight Forwarders, Mr. Osita Chukwu, said that cargo owners were losing money every day on container deposits as they could not return the containers in time and the deposit was usually deducted every day until the total amount would be forfeited by the shipping companies and the cargo owners would even meet a debit note waiting for them by the time they were able to get into the port.

He stated that the container deposit, which varied from one shipping company to the other, ranged from N200,000 for a container going within Lagos, to N400,000 and N1.2m for containers going outside the state.

Chukwu explained, “When you go to pick up your cargo, you pay a deposit and you are expected to return the container the following day and have your deposit refunded to you; but when you fail to return it, the deposit is deducted on a daily basis; and if you end up spending four or five days on the road, the deposit is deducted and you may end up not getting any refund.

“This is what has been happening to some of us. Some containers stay up to one week on the road and if someone has up to 30 containers, he will lose money on all of them.”

Demurrage charges, which reportedly hit N6.7bn in June, have also continued to increase as the situation goes from bad to worse, stakeholders have said.

The Chairman, International Freight Forwarders Association, PTML Chapter, Mr. Sunday Nnebe, said that on the average, cargo owners were parting with N25,000 per container daily for cargoes trapped at the ports.

According to him, some people bring in about 50 containers at the same time and charges are paid on each of the containers.

Also raising the alarm about the rising costs, the Chairman of the Seaport and Terminal Operators of Nigeria, Dr. Victoria Haastrup, stated that the gridlock had led to congestion as there had been an increase in inward cargo throughput with ships lining up and waiting for weeks to discharge cargoes.

The congestion at the ports, according to her, has resulted in trucks parking on all available streets in Apapa.

She linked the parking of trucks in all available spaces to the July 19 incident when a tanker driver who parked in front of a bank was shot dead by a mobile policeman. Two banks were razed by the irate colleagues of the deceased driver.

Haastrup added that it was the first time in 11 years that Nigeria would be witnessing port congestion of this nature, adding that if the situation was not brought under check, the country would start paying congestion fees.

A sum of $100,000 is said to be the annual congestion fee that the Federal Government paid in the past when the ports witnessed congestion.

Owners of the goods have also said that the cost will be transferred to the final consumers.

“I expect the increase in the costs of these consumer goods to be over 300 per cent,” Nnebe said.

Currently, the cost of goods especially imported cosmetics, clothing items and accessories, have risen by about 100 per cent.

For instance, a pair of female stock trousers that sold for N5,000 last year, now sells for N10,000.

The same was observed for ladies’ jackets, which sold between N4,000 and N5,000 last year, but now going for between N10,000 and N12,000 at the Balogun Market.

Stakeholders urged the government to take practical steps to address the situation, while the road rehabilitation work lasts.

Nnebe said “They should pour gravel on the portions of the roads, especially the roads leading from Mile 2 to Tincan, that are bad so that trucks can pass without falling.

“The refuse removed from the gutters has been heaped on the Tincan road for the past one month, leaving only one lane for motorists. Recently, two containers fell on the road and it is quite difficult to pass at the moment.”

While the Nigerian Ports Authority, which is among those in charge of the road rehabilitation, noted that traffic control officers had been deployed to control traffic along the Apapa-Wharf axis, Haastrup pointed out that the traffic control officers needed to be deployed in large numbers and made to work round the clock if there was to be a change in the situation.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigeria’s Growth Forecast Lowered to 3% for 2025, Higher than Most Emerging Markets

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IMF global - Investors King

The International Monetary Fund (IMF) has projected a 3% growth rate for Nigeria in 2025, slightly down from the 3.1% forecasted for 2024.

Despite this slight decline, Nigeria’s projected growth remains higher than that of many emerging markets as detailed in the IMF’s latest World Economic Outlook released on Tuesday.

In comparison, South Africa’s economy is expected to grow by 1.2% in 2025, up from 0.9% this year. Brazil’s growth is projected at 2.4% from 2.1% in 2024, and Mexico’s growth forecast stands at 1.6% for 2025, down from 2.2% in 2024.

However, India is anticipated to see a robust growth of 6.5% in 2025, although this is slightly lower than the 7% forecast for 2024.

The IMF’s projections come as Nigeria undertakes significant monetary reforms. The Central Bank of Nigeria has been working on clearing the foreign exchange backlog, and the federal government recently removed petrol subsidies.

These reforms aim to stabilize the economy, but the country continues to grapple with high inflation and increasing poverty levels, which pose challenges to sustained economic growth.

Sub-Saharan Africa as a whole is expected to see an improvement in growth, with projections of 4.1% in 2025, up from 3.7% in 2024. This regional outlook indicates a modest recovery as economies adjust to global economic conditions.

The IMF report underscores the need for cautious monetary policy. It recommends that central banks in emerging markets avoid easing their monetary stances too early to manage inflation risks and sustain economic growth.

In cases where inflation risks have materialized, central banks are advised to remain open to further tightening of monetary policy.

“Central banks should refrain from easing too early and should be prepared for further tightening if necessary,” the report stated. “Where inflation data encouragingly signal a durable return to price stability, monetary policy easing should proceed gradually to allow for necessary fiscal consolidation.”

The IMF also highlighted the importance of avoiding fiscal slippages, noting that fiscal policies may need to be significantly tighter than previously anticipated in some countries to ensure economic stability.

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Economy

Nigeria’s Inflation Rises to 34.19% in June Amid Rising Costs

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Food Inflation - Investors King

Nigeria’s headline inflation rate surged to 34.19% in June 2024, a significant increase from the 33.95% recorded in May.

This rise highlights the continuing pressures on the nation’s economy as the cost of living continues to climb.

On a year-on-year basis, the June 2024 inflation rate was 11.40 percentage points higher than the 22.79% recorded in June 2023.

This substantial increase shows the persistent challenges faced by consumers and businesses alike in coping with escalating prices.

The month-on-month inflation rate for June 2024 was 2.31%, slightly up from 2.14% in May 2024. This indicates that the pace at which prices are rising continues to accelerate, compounding the economic strain on households and enterprises.

A closer examination of the divisional contributions to the inflation index reveals that food and non-alcoholic beverages were the primary drivers, contributing 17.71% to the year-on-year increase.

Housing, water, electricity, gas, and other fuels followed, adding 5.72% to the inflationary pressures.

Other significant contributors included clothing and footwear (2.62%), transport (2.23%), and furnishings, household equipment, and maintenance (1.72%).

Sectors such as education, health, and miscellaneous goods and services also played notable roles, contributing 1.35%, 1.03%, and 0.57% respectively.

The rural and urban inflation rates also exhibited marked increases. Urban inflation reached 36.55% in June 2024, a rise of 12.23 percentage points from the 24.33% recorded in June 2023.

On a month-on-month basis, urban inflation was 2.46% in June, slightly higher than the 2.35% in May 2024. The twelve-month average for urban inflation stood at 32.08%, up 9.70 percentage points from June 2023’s 22.38%.

Rural inflation was similarly impacted, with a year-on-year rate of 32.09% in June 2024, an increase of 10.71 percentage points from June 2023’s 21.37%.

The month-on-month rural inflation rate rose to 2.17% in June, up from 1.94% in May 2024. The twelve-month average for rural inflation reached 28.15%, compared to 20.76% in June 2023.

The rising inflation rates pose significant challenges for the Central Bank of Nigeria (CBN) as it grapples with balancing monetary policy to rein in inflation while supporting economic growth.

The ongoing pressures from high food prices and energy costs necessitate urgent policy interventions to stabilize the economy and protect the purchasing power of Nigerians.

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Economy

Inflation to Climb Again in June, but at a Reduced Pace, Predicts Meristem

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Nigeria's Inflation Rate - Investors King

As Nigeria awaits the release of the National Bureau of Statistics’ report on June 2024 inflation, economic analysts project that while inflation will continue its upward trajectory, the pace of increase will moderate.

This comes after inflation rose to a 28-year high of 33.95% in May, up from 33.69% in April.

Meristem, a leading financial services company, has forecasted that June’s headline inflation will rise to 34.01%, a slight increase from May’s figure.

The firm attributes this persistent inflationary pressure to ongoing structural challenges in agriculture, high transportation costs, and the continuous depreciation of the naira.

Experts have highlighted several factors contributing to the inflationary trend. Insecurity in food-producing regions and high transportation costs have disrupted supply chains, while the depreciation of the naira has increased importation costs.

In May, food inflation grew at a slower pace, reaching 40.66%, but challenges in the agricultural sector, such as the infestation of tomato leaves, have led to higher prices for staples like tomatoes and yams.

Meristem predicts that food inflation will persist in June, driven by these lingering challenges. Increased demand during the Eid-el-Kabir celebration and rising importation costs are also expected to keep food prices elevated.

Core inflation, which excludes volatile items like food and energy, was at 27.04% in May. Meristem projects it to rise to 27.30% in June.

The firm notes that higher transportation costs and the depreciation of the naira will continue to push core inflation up.

However, they also anticipate a month-on-month moderation in the core index due to a relatively stable naira exchange rate during June, compared to a more significant depreciation in May.

Cowry Assets Management Limited has projected an even higher headline inflation figure of 34.25% for June, citing similar concerns.

The firm notes that over the past year, food prices in Nigeria have soared due to supply chain disruptions, currency depreciation, and climate change impacts on agriculture.

This has made basic staples increasingly unaffordable for many Nigerians, stretching household budgets.

As inflation continues to rise, analysts believe the Central Bank of Nigeria (CBN) will likely hike the benchmark lending rate again.

The CBN’s Monetary Policy Committee (MPC) has raised the Monetary Policy Rate (MPR) by 650 basis points this year, bringing it to 26.25% as of May 2024.

At a recent BusinessDay CEO Forum, CBN Governor Dr. Olayemi Cardoso emphasized the MPC’s commitment to tackling inflation, stating that while the country needs growth, controlling inflation is paramount.

“The MPC is not oblivious to the fact that the country does need growth. If these hikes hadn’t been done at the time, the naira would have almost tipped over, so it helped to stabilize the naira. Interest rates are not set by the CBN governor but by the MPC committee composed of independent-minded people. These are people not given to emotion but to data. The MPC clarified that the major issue is taming inflation, and they would do what is necessary to tame it,” Cardoso said.

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