Why shipping cost is high in Nigeria

Why shipping cost is high in Nigeria

 

There is no doubt that the shipping cost in Nigeria overtime has remained on an upward trajectory, thus forcing the cost of commodity been shipped into Nigeria high.

Nigeria heavily relies on products been shipped into the country, as it could be described as an import-dependent country, indeed a dumping ground for all manner of industrial consumables from different countries is well known.

The most populous black nation in the universe with a population of over 200 million, produces merely a fraction of what it uses, while the rest are imported.

iBrandTV findings showed that Nigerian businesses paid foreign shipping lines $45 billion (about N21.6 trillion) as freight charges between 2015 and 2019.

Nigeria trade distribution

Why shipping cost is high in Nigeria
Source NBS

According to the National Bureau of Statistics (NBS), Nigeria recorded a trade deficit of N7.37trn in 2020 while its total trade stood at N32.42trn.

In Q4 2020, Nigeria’s total merchandise trade stood at N9.12trn, an increase of +8.9% when compared to Q3 2020 but a decline of -9.9% when compared to Q4 2019.

The export component of trade stood at N3.19trn in Q4 2020 representing an increase of +6.7% when compared to Q3 2020 but a decline of -33% when compared to Q3 2019.

READ ALSO: Peterside names Piracy, others, as major maritime crimes of global concern

On the flip side, total imports stood at N5.92trn in Q4 2020, an increase of +10.1% when compared to Q3 2020 and an increase of +10.8% when compared to Q4 2020. Imports accounted for 65% and exports accounted for 35% of total trade in 2020.

Nigeria’s trade statistics show the fragile state of the economy. Despite the federal government’s efforts at industrialization, and increasing non-oil exports, the economy still imports a high quantity of manufacturing, agricultural, and raw material goods.

Although it has a huge expanse of arable land, the Nigerian economy in Q4 2020 imported agricultural goods valued at N532.4bn and only exported agricultural goods valued at N55.78bn. Nigeria’s large import of agricultural produce speaks volumes of the inherent crisis in the agricultural sector such as farmer’s/herder’s crisis, insecurity, lack of storage facilities and infrastructure, logistics problems, etc.

This development has raised eyebrows and subsequently forcing most of its populace into abject poverty.

NIMASA, Shipping Council reacts

Speaking on the development, the Nigerian Maritime Administration and Safety Agency (NIMASA), says piracy decline will end War Risk Insurance premium on Nigeria-bound cargoes as well as reduce shipping cost

According to the Director-General of NIMASA, Dr Bashir Jamoh, the international shipping community had acknowledged the progress made by Nigeria in her quest for security in the Gulf of Guinea, as confirmed by recent reports by the International Maritime Bureau (IMB).

He said the sharp decrease in maritime incidents,  logged in IMB’s second-quarter report, was valuable feedback on the agency’s campaign for Nigeria’s delisting from countries under the war risk insurance burden.

He added that this was also an indication that the shipping community,  looked forward to sustenance of the progress made.

According to the director-general, feedback on our campaign for Nigeria to be removed from countries paying war risk insurance premium on inbound cargoes,  has confirmed that the international shipping community is watching developments in Nigeria and the Gulf of Guinea with keen interest.

“Their desire is to see the sustainability of the positive developments in recent times,  leading to a drastic decline in piracy attacks in Nigerian waters and the Gulf of Guinea.

“Since the deployment of the Deep Blue Project assets in February, there has been a steady decline in piracy attacks in Nigerian waters, on a monthly basis.

“With adequate sensitisation of the international shipping community, I am sure that our quest to be removed from nations considered to have dangerous waters will soon materialise for the benefit of Nigerian shippers,” he said.

On his part, the Executive Secretary of the Nigerian Shippers’ Council (NSC), Mr Emmanuel Jime, called for greater collaboration among relevant government agencies, to enable the country to derive full economic benefits from the maritime sector.

He commended NIMASA for placing fleet expansion at the heart of her efforts to encourage indigenous participation in the maritime industry.

The executive secretary stressed that there was no better time to have a national carrier than now, when the world was gradually looking away from fossil fuels, the current mainstay of the Nigerian economy.

“Nigeria cannot be caught unawares. We need to look at ways of developing our shipping sector, which, from studies, is capable of earning the country even more than oil, annually.

” Maritime security is pivotal to achieving this goal,” he said.

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