The ability of the Nigerian economy to move at a pace faster than it has reported in the last two years may be under threat in 2019 owing to the persistent gridlock in and around Apapa, the country’s premier port city.
“Gridlock in Apapa is causing a great loss to the Nigerian economy as the major port is located there. The gridlock is causing a great setback to businesses in the state in particular and Nigeria as a whole,” Mohammed Musa, chairman, Lagos chapter of the Road Transport Employers’ Association of Nigeria (RTEAN).
A country’s Gross Domestic Product (GDP) is measured by its net export; that is, the value of a country’s total exports minus the value of its total imports. Thus, any hindrance to the flow of export and import will affect the economic growth rate.
Apapa gridlock was a challenge to the country’s economic growth in previous years. Since 2015, Nigeria’s GDP growth rate has remained below its annual population growth rate of 2.7 percent, figures from the National Bureau of Statistics (NBS) show.
Asked if 2019 would be different from the previous years, Ayo Teriba, CEO of Economic Associates, asked if anything has changed.
“If not, why expect 2019 to be different?” he queried.
The International Monetary Fund (IMF) in January projected a 2 percent growth rate for the country in 2019, even though it has marginally revised it upward to 2.1 percent.
“Apart from the time wasted as a result of the Apapa gridlock, it increases cost and this slows down the activities of the many companies located in the area,” said Ayo Akinwunmi, head of research at FSDH Merchant Bank.
“This will add up to the slowdown in the economy. Of course we are beginning to see it in the result of some companies,” Akinwunmi said.
Firms in the Fast-Moving Consumer Goods (FMCG) industry recorded less-than-spectacular performance in their first quarter (Q1) 2019 financials. Apapa gridlock topped issues that led to that poor performance, BusinessDay checks show.
The largest consumer goods firms made N419.14 billion in the first three months of 2019, a 3.78 percent drop from the N435 billion realised in the same period in 2018, according to BusinessDay analysis of the firms’ financials.
Average net margins fell to 7.07 percent in the same period, a 9.17 percent decline compared to the previous year. This means the companies are finding it difficult to turn each naira generated in sales into higher profit.
Checks revealed that sales in the industry receded in the review quarter as the firms’ margins declined. Experts fret the companies could resort to downsizing their workforce to stay afloat, a bad omen for a country where unemployment rate hit 23.10 percent in the third of 2018, according to the National Bureau of Statistics (NBS).
“Access to the ports in Apapa is key to Nigeria growing its non-oil exports, diversifying its economy and creating jobs,” Kalu Aja, CEO, AfriSwiss Capital Assets Management Ltd, said.
He added that the Buhari administration recognises “this and has set up a taskforce to clear the roads and bridges leading to the ports”.
“However, should the network of roads that connect the ports to the exporters remain dilapidated and clogged with stationary traffic, the diversification target will not be met,” Aja said.
About 5,000 trucks seek access into Apapa and Tin-Can Ports in Lagos on daily basis, according to a maritime report by the Lagos Chamber of Commerce and Industry (LCCI). These trucks have continued to plunder the port environment as the access roads to the ports were originally meant to accommodate only 1,500 trucks, LCCI said.
The cost of transportation from Apapa has increased by about 400 percent due to gridlock, according to the Nigerian Logistics and Supply Report. For instance, movement of consignment from Apapa to Trade Fair Complex in Lagos, which used to cost between N80,000 and N120,000 for 20-foot and 40-foot containers, respectively, now costs between N550,000 and N600,000.
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