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Nigeria Targets Share of $380bn Global Seaborne Trade

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NIMASA
  • Nigeria Targets Share of $380bn Global Seaborne Trade

The global seaborne trade is increasing tremendously and Nigeria is putting everything in motion to ensure that there is as much local participation in it as possible.

According to maritime sources, the global seaborne trade rose to 112 per cent in the third quarter of 2018.

Unfortunately, Nigeria is not even listed among nations that actively participate in the global seaborne trade and this has been the situation for decades, since the decline of the first Nigerian National Shipping Line.

Currently, Nigeria has no national vessel bearing its flag and all its cargoes are borne by foreign shipping lines.

While presenting a paper titled ‘Indigenous Fleet Development, what Options’, the Executive Secretary, Nigerian Shippers Council, Mr Hassan Bello, noted that Nigerians had tried and failed to enter into international shipping, not necessarily due to the huge capital investment required, but because of their inability to compete with foreign operators who had list of incentives from their home governments.

He said, “At the moment, Nigeria cannot claim to have a viable indigenous shipping fleet and this is a disappointment, considering that about 60 to 70 per cent of ship traffic to West and Central Africa are destined for Nigeria.”

Bello said the NNSL was established to boost the image of the country by promoting the Nigerian flag, improving the country’s balance of payment, among other objectives.

He noted, however, that the company operated at a loss due to the modernisation in ship type coupled with evolving technology in the late 80s and 90s.

He recommended private instead of government control of the shipping business, adding that government control would lead to monopoly, non-economic choice of ships and routes, government interference and lack of capacity to compete.

According to the International Maritime Organisation, over 90 per cent of world trade is borne by sea and the real time growth in world Gross Domestic Product in the last two decades is 73 per cent.

Also, world exports and imports in 2017 were $17.8bn and $16.1bn respectively.

Reports from these international agencies also tied global trade to shipping, noting that shipping was the lifeblood of the global economy.

The International Chamber of Shipping and the United Nations Conference on Trade and Development estimated that the operation of merchant ships contributed about $380bn in freight rates within the global economy, equivalent to about five per cent of world trade.

According to it, there were over 50,000 merchant ships trading internationally, transporting every kind of cargo, adding that some of the vessels could cost up to $200m to build.

The world fleet is registered in over 150 nations and manned by over a million seafarers of virtually every nationality.

UNCTAD revealed that in terms of participation, the top 35 flags of registration by tonnage in 2018 were Panama, Marshall Islands, Liberia, Hong Kong (China), Singapore and others.

In its Review of the 2018 Maritime Transport, the body reported that with regard to shipping value chain, Germany was the largest container ship owning country.

Stakeholders are, however, determined to get more Nigerians into the global shipping business.

The Nigerian Maritime Administration and Safety Agency in 2017 set up the Cabotage Compliance Strategy to create room for more indigenous shipowners to trade in Nigeria’s territorial waters.

The agency said in line with the new strategy, it would no longer grant permission for foreigners to take on jobs that Nigerians were qualified to handle aboard vessels trading in Nigeria.

While unveiling the enormous potential of the maritime sector in the next two years, the Director-General, NIMASA, Dr Dakuku Peterside, said the government had finalised plans to empower local shipowners to acquire vessels and also build capacity to compete in international trade.

Peterside said in addition to the $300m Cabotage Vessel Financing Fund, the agency also sought alternative source of finance that could be accessed at single-digit by shipowners.

The Director-General, the Nigerian Content Development and Monitoring Board, Simbi Wabote, said the agency had equally partnered with NIMASA to increase local participation in the shipping sector.

Wabote, whose agency established $200m Nigerian Content Development Fund to aid the promotion of local content in the oil and gas sector, said efforts had been intensified to project local shipowners to the forefront of global seaborne trade.

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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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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