Nigeria is desperate for foreign exchange, yet businesses that should be contributing towards earning dollars, in particular, will be losing at least N55 billion ($142m) within the two weeks the country’s seaports in Lagos will not be allowing exports trucks.
READ ALSO: Stock: Equity Market Rallies N109bn Rally
While the country’s non-oil exports for 2020 stood at N1.43 trillion, it averaged N27.5 billion on a weekly basis; in a year trade was significantly down, according to data from the National Bureau of Statistics (NBS). For two weeks, it comes to N55 billion.
However, trade is expected to recover this year as economies recover from the COVID-19 pandemic and N55 billion is at best a conservative estimate that is likely far from what the economy, and in particular, businesses would lose.
In 2019, when trade was better, non-oil exports had a value of N2.51 trillion and if trade this year, as the global economy is gradually rebounding, is as good as 2019, then the losses over the two-week period could even be starting at N96.8 billion ($251m).
“It was abrupt,” said Ibukunoluwa Akinrinde, technical anchor of the NESG Trade, Investment and Competitiveness Policy Commission. “If prior to now, the NPA for reasons best known to it, did not sound the alarm it wanted to halt exports.”
One month to that time, the NPA should have created awareness, with a date it was going to embark on this action, he explained, saying, “Arbitrariness of decisions is part of what affects investors’ confidence.”
Arbitrariness like this see businesses getting their fingers burnt. Those prepared for exports such as through the Sea Link Project could do short cargo movement within two weeks to arrive the destination. Those required for use within a month after which they may no longer be in conditions suitable for what they are needed will now get hurt, leading to colossal losses.
Suspension of export trucks by the ports authority, apart from the value of export goods now stranded, would also see exporters incurring demurrage and detention fees.
Those who had dispatched trucks laden with goods would have to pay the cost of those trucks staying put till delivery can be done at the cargo exports terminals.
To have the shipments returned till the NPA gets its acts right would also mean paying for the goods to be returned to wherever they may have come from in Nigeria.
Anyway it is seen, businesses are bound to lose, and big too.
“In export, once you sign an agreement with the buyer abroad and it takes you two weeks or months to access the port and there is rejection, it becomes double tragedy,” John Isemede, a consultant on Export Value Chain to United Nations Industrial Development Organisation (UNIDO), told BusinessDay. “This is because those goods still have to be brought back to Nigeria. It is like collecting a corpse from the mortuary.”
This indicates yet another casualty of this decision as previously highlighted by BusinessDay. The sanctity of contracts will be broken by many exporters, not of their own doing, but because the port administrators decided to truncate their sources of livelihoods on the back of poor planning.
From different parts of Nigeria, trucks carrying products in export containers are on their way to the Lagos ports. Those who have paid for goods to be transported on those trucks will now have to bear additional costs and shipping lines are expected to charge the export demurrage and detention fees, respectively.
Add a Comment