Friday, September 7, 2018

Nigerian Non-Oil Export Volume Slides Back To The Default Level

Non-Oil Export Volume Slides Back To The Default Level
The fear of trend watchers of the international trade sector of the Nigerian economy has finally crystallised. The sharp increase in the non-oil export volume seen in the first quarter of 2018 has suffered huge setback and no thanks to the Apapa Gridlock, a major factor that has caused the sector to relapse into the default mode. 

According to the second quarter report of the foreign trade data from the National Bureau of Statistics, the non-oil export contribution to total export from Nigeria fell from a record high of 12.3% in the first quarter of 2018 to 4.9% in the second quarter. 

This sharp decline can only be attributed to two major complementary factors. First is the fact that about 60% of Vessels that visit Nigeria annually call the Lagos ports (which are Apapa and Tincan Island port) and second is the very slow pace at which trucks carrying goods bound for export are entering into the port due to the port access road construction that is also being done at a snail speed. 

On one hand, these factors have led to the very high rate of haulage to and from the port by more than 400%. This has consequently increase the total cost of exporting any item via Apapa ports to a level that is making Nigerian products to be prohibitively high and uncompetitive when compared to that of the competitors in the export market. 

On the other hand, the delay of the trucks in entering the port is making exporters to incur huge loses. This is because, they constantly miss the scheduled Vessels for their shipments. This consequently results in late shipment which either makes the buyer to reject the shipment because it is coming late or make the presentation of their shipping documents discrepant which will delay payment in a letter of credit transactions and further increase the cash conversion cycle. 

In some cases, trucks arriving in Lagos spend about 3weeks after their arrival to enter the port. This makes some products (especially Agricultural commodities) begins to degenerate and eventually rotten away due to heat of the sun on the stationary trucks carrying the them. This is making a mess of all the diversification drive of the present administration from Oil to other sectors of the economy especially the Agricultural sector.

All these delays in shipment, discrepancies in documents, degenerated goods, demurrage fees on trucks, detention fees on containers have led to huge debts in the non-oil export business and thus leading to the discouragement of both the established and intending exporters in Nigeria. All these account for the sharp decline in the non-oil export volume seen in the second quarter of 2018. 

Finally, it is very important for the federal government of Nigeria to know that growth of export trade is not dependent on funding only but also on infrastructure that makes doing the trade business easier. I will like to therefore call on the government to not just fix the road in Apapa but also consider working on the railway to the port to reduce the number of trucks entering Apapa everyday. There is need to also consider the dredging the water channels in other ports in the country in order to attract bigger Ships can only visit the Lagos ports due to their sizes. 

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