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With just a few weeks left until Christmas, the prices of goods have surged due to the high exchange rate for cargo clearance imposed by the Central Bank of Nigeria. In this piece, ANOZIE EGOLE examines the impact of the new exchange rate and explores potential solutions.
Recent developments in the Nigerian maritime sector paint a grim picture, transforming importation into a nightmarish ordeal for importers as the situation deteriorates daily.
In less than a year, the once flourishing sector had become a shadow of grappling with policy changes and fee hikes imposed by the government and service providers, a situation deemed harsh by industry operators.
Amidst policy uncertainties, licensed customs agents and other players also contend with deteriorating infrastructure, further contributing to the high costs of goods and services.
Industry practitioners also battle the challenges posed by the dilapidated state of ports, alongside the fluctuating exchange rate.
The Nigerian Bureau of Statistics reports in its Selected Food Price Watch for October 2023 that the average price of 1kg of tomatoes surged by 48.73 per cent year-on-year, rising from N454.46 in October 2022 to N675.91 in October 2023.
“On a month-on-month basis, it increased by 19.48 per cent from N565.69 in September 2023.
Similarly, the average price of 1kg rice locally sold loose rose by 68.10 per cent on a year-on-year basis from N487.47 in October 2022 to N819.42 in October 2023, while on a month-on-month basis, there was an increase of 8.24 per cent.
The average price of 1kg of beans brown (sold loose) rose by 39.90 per cent on a year-on-year basis from N564.69 in October 2022 to N790.01 in October 2023.
On a month-on-month basis, it increased by 10.19 per cent from N716.97 in September 2023. Likewise, the average price of 1kg beef boneless stood at N2,948 in October 2023.
This indicated that on a year-on-year basis, the price rose by 30.08 per cent from the value recorded in October 2022 (N 2,266), and 4.65 per cent on a month-on-month basis from N2,816 in September 2023,” the report said.
The Bureau confirmed the fact that the prices of commodities are indeed very high and may likely affect the Yuletide celebration.
However, in a bid to tackle the issues of the dilapidated port infrastructure and reduce the cost of importation, the management of the Nigerian Ports Authority recently disclosed its plans to commit a sum of $1bn for the rehabilitation of the ports.
The Managing Director of NPA, Mr. Mohammed Bello-Koko, while making the disclosure, said that the rehabilitation exercise would commence in the first quarter of 2024.
Bello-Koko, who spoke during a panel session at the 43rd Annual Council Meeting of the Port Management Association of West and Central Africa, in Lagos, said that almost all the ports in Nigeria need rehabilitation and NPA is initiating a substantial overhaul, starting with the Tincan Island and Apapa Ports in Lagos.
According to him, “The objective of the authority is to enhance the physical infrastructure of these ports to accommodate vessels of all sizes and increase the draft at the quayside.
Increasing the draft is intended to achieve draft depths of up to 14 meters and this initiative will render Nigerian ports more competitive on a global scale,’’ he said.
Bello-Koko further stated that the NPA was also strengthening collaborations with the private sector to establish new seaports.
He said the Lekki Deep Seaport had already commenced operations, and the Badagry Deep Seaport recently signed an agreement with a Middle Eastern party, with construction scheduled to commence early next year.
The NPA boss noted that these endeavors exemplify the NPA’s determination to create a multimodal transportation system connecting all ports seamlessly.
Duty soars
The recent 25 per cent hike in charges imposed by Comet Shipping Agencies Nigeria Limited on imported vehicles and other goods has exacerbated the challenges faced by importers and their agents.
For many licensed customs agents in the nation’s maritime sector, it appears that the Federal Government, through some of its agencies, is introducing policies seemingly designed to drive practitioners out of business.
Notably, one such policy is the recent increase in the exchange rate for cargo clearance, escalating from N757 per dollar to N783.
The PUNCH observed that the exchange rate for cargo clearance in the port at the portal of the Nigeria Customs Service, rose from N757 per dollar to N783 per dollar representing a 3.4 per cent increase.
This according to licensed agents is the fourth time the exchange rate for cargo clearance is taken up in a space of five months.
They also lamented that so many licensed customs agents have lost their lives and the majority of them were out of work due to some of these policies.
Licensed agents told our correspondent that the new rates would now guide the importers and clearing agents as they make quotations for new jobs and for capturing payments which according to them would lead to a decline in importation.
Reacting to this, the Youth Leader of the Association of Nigerian Licensed Customs Agents, Tincan Island Command, Sikiru Remilekun, said the development will worsen the already declined import sector in the country.
“Since the implementation of the floating dock seven months ago, importation has dropped by 60 per cent, and we don’t need prophet or soothsayer to tell us what will happen next, we should expect up to 70 per cent drop in importation,”
Sikiru, who is also the Chief Executive Officer of Sikremstar Logistics Limited, complained that many importers have dumped imports for other businesses.
“Majority of the importers have switched and diversified to another business, a lot of clearing agents are roaming the streets doing nothing, many have been depressed as a result of no work. How do we cope when the importers refuse to import due to a hike in dollars? It’s barbaric.
“I want to sincerely and honorably pass a message to the minister of marine and blue economy, Adegboyega Oyetola, to wade into the lingering issues we are facing in the industry; the present situation is killing,” he stated.
Also speaking, the Ports & Terminal Multipurpose Limited Chapter Chairman of the National Association of Government Approved Freight Forwarders, Mr. Thomas Alor, said, “There was no pre-information. We just woke up this morning and noticed that they had raised the exchange rate for clearing of cargoes.
“It was when we went for capturing that we noticed that it had increased, no one was carried along, there was no circular and no meeting was held about that. It took everyone unaware; it will affect the duty as it has increased because you know it is the exchange rate that determines the duty.
“Already there is about 70 per cent drop in the importation and with this, it will worsen, it will drop to about 80 per cent or more,” he added.
The founder of the National Council of Managing Directors of Licensed Customs Agents, Mr. Lucky Amiwero, said that the increase in exchange rate has already started affecting the Christmas season.
“It is going to affect the maritime industry negatively because, once you increase the exchange rate, you are increasing the value of goods, the clearance would increase.
“If you look at the situation now, it doesn’t even look like Christmas is coming, things are so tough in the country, and things that are coming in are limited.
“There is nothing to show that we are entering Christmas or just a few weeks to Christmas,” he stated.
Amiwero added that the poverty rate is extremely high adding that the cost of goods in the market has gone up and people were losing their jobs.
He said “The cargo inflow is low and we are still increasing the exchange rate. The poverty rate is being stretched. Once you increase the exchange rate, the more the value of goods goes higher. It has negative implications.
“The two areas where the average Nigerian should have benefitted were from this exchange rate and fuel subsidy. Now you have removed the fuel subsidy and the exchange rate, the poverty rate is extremely high. Many people are moving out of employment and are becoming unemployed, it is extremely difficult,” he concluded.
A trader, Cynthia Chioma, who deals in wines along the Ijesha, area of Lagos, lamented that the cost of drinks has skyrocketed.
According to her, Earlier this year, drinks that we used to buy for like N7000 for red wines, have gone up to as high as N15000 and more.
For whiskey, we used to buy them for around N17,000 to about N23,000 and something like that but for now, it is from N35,000 upwards.
There are some drinks whose prices increase weekly by N4,000, N5000, and N7,000 the Davina Grape Juice was N18,000 before it increased to N24, 000 and it is now N28000 we don’t know how much it will be sold by December, you know this is the season,”
She lamented that the atmosphere doesn’t look like Christmas is coming in a few weeks unlike what it used to be before.
“The general atmosphere doesn’t look like there is any Christmas celebration. In previous Christmas celebrations like this, we used to record higher sales with people coming to buy drinks for celebrations in bulk but it is not the same thing now.
“The whole environment is very dull, and only a few come to buy drinks and smaller quantities. Before now, one customer could come and buy drinks worth N400, 000 but is no longer the same thing now, people hardly come to buy and even if they do come, they only buy a few products,” she explained.
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