Sea imports into Nigeria fall for third successive year

…threaten N1.37 trillion non-oil revenue estimate

Chances of achieving a N1.37 trillion non-oil revenue projection this year may have gone from bad to worse for Nigeria, after fresh data from the National Bureau of Statistics (NBS) show that maritime imports declined for the third successive year in 2016.
A total of 4,025 vessels berthed at the various sea ports across the country in 2016, the least over the last three years, according to data compiled by BusinessDay and sourced from the National Bureau of Statistics (NBS).
The number of vessels that landed in 2016 represents a 26 percent decline, compared to 5,090 in 2015. While it represents a 24.7 percent dip, relative to 5,349 vessels in 2014 and a much steeper 25 percent fall, relative to 5,369 in 2013.
“The capacity to import has reduced on the back of dollar shortages and the 41 items policy by the Central Bank of Nigeria,” said Muda Yusuf, director-general of public policy advocacy group, the Lagos Chamber of Commerce and Industry.
While fewer imports have brought relief to commuters in Apapa, one of Nigeria’s busiest ports known for exasperating traffic gridlocks in the time of a boom, it is a signal of a deteriorating economy and threatens government revenue accruable from the Nigerian Customs Service, which is expected to contribute over one-third of total non-oil revenue in 2017.
Non-oil revenues, at N1.37 trillion, also comprise Companies Income Tax, Value Added Tax, and Federation Account levies, which are already being bogged down by sinking company profits and subdued household consumption.
“The reducing port activities or passenger traffic at seaports and even airports, are all lagging indicators of the economic recession,” said Kyari Bukar, chairman of the Nigeria Economic Summit Group (NESG).
“The danger here is that with less activity, customs and excise duty receipts accruable to government could be less,” Bukar said.
Nigeria is desperate to diversify its earnings from crude oil to boost economic growth which slumped to a 25-year low in 2016 following a slide in oil prices and below trend production volumes.
With the economy in recession, government officials are planning a N7.3 trillion budget this year, with revenue projections at N4.9 trillion, but much of it will depend on the success of non-oil estimates, which amounts to around 30 percent of the total.
Taiwo Oyedele, head of tax and regulatory services, however contends that better revenue collection efficiency could see the Customs service rake in more revenue despite low shipping activity.
“Import to GDP is 12 percent, yet the Customs generated less than N900 billion in 2016, in a sign of the huge collection inefficiencies in the system,” Oyedele said by phone. “South-Africa’s import to GDP is less than 12 percent, yet it makes more in import duties than Nigeria.”
The Nigeria Customs Service generated N898 billion as revenue in 2016, which was 4 percent off the targeted N937 billion and N6 billion less than 2015’s revenue of N904 billion, according to Joseph Attah, the service’s spokesman.
Attah attributed the shortfall to the difficulty in accessing foreign exchange and removal of the 41 items.
Nigeria is starved of dollars after low oil prices and militant sabotage on oil production curbed petrodollars even as foreign investment has fallen to a nine year low.
Officials have resisted calls to allow the local currency, the naira, move in tandem with dollar supply like in Russia, Colombia or Kazakhstan, exacerbating a dollar shortage that has discouraged importation.
Instead, the country has reverted to a hard peg after briefly testing a currency float in June.
The naira trades slightly stable at an artificial rate of N305 per dollar at the official market, but in the parallel market where most businesses source dollars, the dollar goes for a premium of around N500.
A list of 41 items banned from accessing dollars at the official market was put in place in 2015 to control dollar demand. Though it has benefited local production, it has sparked unmet demand and sent traffic to the parallel market, creating further disparity between both markets.
Tony Anakebe, an industry analyst, says the volume of imported goods through the ports has drastically reduced, due to the issues around shortfall in the supply of foreign exchange and access to foreign currency.
“Most of these goods that used to come through the nation’s seaports have been diverted to Cotonou and Ghana, and most Nigerians also import through Cameroun and bring the goods through land borders close to the northern part of the country, leading to huge revenue loss.”
Jonathan Nicole, president of Shippers Association of Lagos State, affirmed that 2016 was a very difficult year for businesses, such that the first three quarters of the year came with vicious challenges on shippers.
According to Nicole, “The blacklisting of 41 items by the Central Bank of Nigeria (CBN) not only deprived industries of needed raw materials but almost crippled our industrial environment.”
“The exchange rate for Customs import duty for cargo clearing also became a challenge, resulting in high cost of doing business at the ports and made the rate approved in the Form M different from the rate the Nigeria Customs Service (NCS) introduced. This created untold financial hardship, as importers needed more foreign currency to clear their cargo,” Nicole said.
“The Nigeria Customs Service would even find it difficult to meet their revenue target for 2017 if the government does not review the 41 item policy,” he added.
The ship traffic statistics at Nigerian ports reflected that a total number of 19,833 vessels berthed at the various ports between 2013 and 2016. Similarly 543,842,425 tonnages were registered within the period under review.
Tin Can Island Port handled the most ships in the period, according to the NBS report, accounting for 33 percent of total number of ships that berthed in all ports and 32% of total tonnage registered in all ports.
It is closely followed by Apapa port which accounted for 28% of ships that berthed and 25% of total tonnage registered and Onne port which accounted for 15% of ships that berthed and 30% of total tonnage registered.
Also, cargo traffic statistics revealed a total of 312,185,808 cargo traffic was recorded at all Nigerian ports between 2013 and 2016.
196,851,236 or 63% of the cargo traffic were inwards while 115, 334572 or 37% were outward.