The outcome of the 2019 general elections, availability of and access to foreign exchange, as well as global trade output are macroeconomic indicators that will drive growth in Nigeria’s maritime industry in 2019.
By estimation, international developments as they relate to growth in global output and trade, situation in the global crude oil market and international maritime regulatory conditions will have serious economic implications on the nation’s maritime sector.
The above projection by the recent Nigerian Maritime Administration and Safety Agency (NIMASA) report reemphasises the earlier prediction by industry analysts that stable economic growth would encourage the importation of various inputs, including raw materials, spare parts, equipment and machineries for the manufacturing sector, and that foreign exchange stability would determine the volume at which manufacturers would import more input into the country.
“The domestic economic conditions and the associated growth in trade, availability of and access to foreign exchange, as well as the evolving factors in domestic maritime regulation will impact on maritime business,” the NIMASA report said.
“Precise forecast estimates are difficult enough. As such, planners and economic operators typically resort to scenarios in anticipating future conditions,” it said.
The report said the economy is expected to pick up, albeit at limited speed, from growth this year. However, growth in the maritime industry has still not recovered to its pre-recession levels of competitiveness and activity, but is expected to be in tandem with the projected growth in the economy.
The report further stated that growth in the global maritime sector is expected to slow over the next five years with crude oil projected to decline by 0.1 percent; containerised trade to decline by 0.4 percent, and seaborne trade by 0.2 percent.
It was also estimated that total fleet will increase at slightly over 4 percent for both 2019 and 2020; total trade will increase to N28.55 trillion in 2019 and N30.11 trillion in 2020, while foreign reserves, at $44.7 billion in 2019, are projected to be $61.7 billion in 2020.
“We expect the uncertainty surrounding the 2019 elections and the time lag possibly required to activate growth-stimulating policies after the inauguration of the newly elected government to impact on economic growth. Growth will also rely on recovery in agriculture, the largest sector of the economy, to once familiar levels above 3 percent. At the baseline, we foresee 2 percent GDP growth in 2019,” said Doyin Salami, CEO of Kainos Edge Consulting Ltd, which prepared the NIMASA report.
Salami, who is also a professor at Lagos Business School (LBS), said the forecast models for the selected parameters rely on a number of macroeconomic indicators as explanatory variables including foreign exchange reserves, total trade, oil prices and oil production.
“We expect growth in the sector to kick off based on assumptions from the Federal Government’s Economic Recovery and Growth Plan (ERGP),” Salami said.
Manufacturers believe the 2 percent GDP growth this year will enable more business and level of production in the manufacturing sector to increase.
Mansur Ahmed, president, Manufacturers Association of Nigeria (MAN), said manufacturers have high hopes that the situation in the port will improve to enable people do more business in 2019.
Tony Anakebe, managing director, Gold-Link Investment Ltd, told BusinessDay in an interview that port business in 2019 will depend on the outcome of the elections, adding that free and fair elections will enable importers and ports to continue recording high volumes from the good results recorded in 2018.
He, however, said multiplicity of government agencies at the ports was one of the factors creating avenue for corruption to take place, urging the incoming government to overhaul the system of cargo clearance for port business to grow.
AMAKA ANAGOR-EWUZIE
