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Nigeria Loses N3.46tn Annually to Port Inefficiency – Survey

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Nigerian ports authority
  • Nigeria Loses N3.46tn Annually to Port Inefficiency – Survey

The Nigerian economy is losing an estimated annual revenue of N3.46tn as a result of the current crises of poor infrastructure, poor policy implementation and corruption at the ports, according to the result of a recent survey carried out by the members of the Organised Private Sector and the Centre for International Private Enterprise.

A breakdown of the losses show that N600bn is lost in Customs revenue, $10bn in non-oil exports and about N2.5tn in corporate earnings across the various sectors of the economy.

The report noted that due to the persistent traffic gridlock in the Apapa area, industrial capacity utilisation currently stood at 38 to 40 per cent, while 40 per cent of businesses located around the port communities had either relocated to other areas, scaled down operations or completely shut down.

According to the report, about 5,000 trucks seek access to Lagos ports on a daily basis along an access road designed to take only about 1,500 trucks daily.

Also, about 60 tank farms are located around the ports, most of which were located without recourse to the original design of the ports, traffic consideration or the volatility of the products in the tanks, it added.

This result in trucks spending more than one week sometimes to access the ports from Lagos mainland due to traffic gridlock, the report added.

“These developments have very huge adverse implications for job creation, tax revenue and real economic activities, with estimated downside effect of about three per cent on the country’s Gross Domestic Product,” the President, Lagos Chamber of Commerce and Industry, Mr Babatunde Ruwase, noted during the unveiling of the report in Lagos on Tuesday.

He pointed out that the 2017 positioning of Nigeria as number 183 out of 185 countries in terms of trading across borders (a major indicator for measuring a country’s ports effectiveness) on the World Bank Ease of Doing Business ranking did not reflect efforts of the present administration on repositioning the ports through series of interventions targeted at improving port efficiency.

“Operators and users of Nigerian ports are increasingly faced with bureaucratic red tape, limited access to the ports due to traffic congestion, constant delays, illegal charges, technical and security breakdown, leading to high cost of operations and competitiveness,” he added.

The LCCI president noted a worrisome level of deliberate resistance by some Ministries, Departments and Agencies of government to implement enabling regulations, including the 2017 Presidential Executive Orders relating to the ports.

He said the report also noted that fights for supremacy, conflicts of interest and revenue ambitions that conflicted with trade facilitation objectives were common issues among the MDAs.

“The report underscored the fact that only 10 per cent of cargoes are cleared within the set timeline of 48 hours, while majority of the cargoes take between five to 14 days, and some take as long as 20 days; deliberate delays induced by MDA officials currently account for approximately 65 per cent and 80 per cent of import clearance and export processing time, respectively,” he said.

The LCCI sought swift intervention in terms of policy reforms, including the single window platform, the enforcement of the Executive Order, reduction in the number of MDAs and security formations at the ports, passing of enabling reforms by the National Assembly and upgrade of rail infrastructure, truck parks and pipeline for movement of wet cargoes, among others.

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 Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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