Legacy of Apapa roads
Two features are sure to be noticed on the roads leading in and out of Apapa, Nigeria’s premier port city. First, though both roads are generally in bad shape, the ones leading out of Apapa are far worse. Secondly, there is always traffic on both sides.
The first of the two features is a subtle indication that much more, in terms of volume and value, comes into Nigeria through the two ports in Apapa than goes out of the country through them. (The roads leading out of Apapa are under more pressure and consequently suffer more wear and tear.)
The second feature is an indication that the country has not efficiently distributed traffic across its ports; for though it has six ports, the Apapa and Tin Can ports, which are located in Apapa, accounted for an average of 47% of cargo throughput yearly between 2007-2014. (There are other ports in Warri, Rivers, Onne, and Calabar, see Chart 1 and 2).
But apart from these two features, what is even more alarming is the fact that the bulk of what comes in through Apapa is an assortment of commodities that can either be grown or manufactured locally.
Import versus export data show that Nigeria’s export outstrips its import (See Chart 3). But this data hides a lot of important and somewhat depressing facts.
Between 2014 and Q3,2015, the correlation coefficient between total export and crude oil export was 0.87, while the correlation between total export and non-oil export stood at 0.29, indicating that oil drives most of the value of the country’s export.
Chart 4 shows Nigeria’s international trade position without crude oil export. As opposed to Chart 3, Chart 4 is the real position of commodity trade with oil export. In particular, Chart 4 mirrors the state of Apapa’s roads. (The lacuna between total non-oil export and total import, gives an indication of the kind of pressure on Apapa roads.)
What Nigerians import
The Nigeria Port Authority’s (NPA) daily shipping position report gives a vivid indication of what Nigeria imports.
For instance, on 22 January, 39 vessels/motor tankers were expected at the Lagos pilotage district, Apapa. Of these vessels/motor tankers, 13 were laden with Premium Motor Spirit, 3 were carrying wheat, 2 were carrying base oil, one was carrying frozen fish, one was laden with
Salt, while 11 contained containerised cargo containers. Only one was carrying steel.
On 27 January, 35 ships/vessels were expected at the same pilotage. Of the 35 ships/vessels, 15 were laden with PMS, one was laden with AGO, 3 had base oil, 4 brought in wheat, while one brought in salt. Others were carrying gypsum, project cargo or other materials brought in in containers.
National Bureau of Statistics (NBS) data gives a clearer picture of the position of imports. Based on the data, certain commodity classes dominate import trade. Also, certain countries trade more with Nigeria than others.
Food, refined petroleum products, vehicles, machines and transportation equipment, and telecommunications equipment make up a large chunk of what is imported. The commodities come from nations including China (which accounts for the biggest chunk of Nigerian import in terms of value), the United States, Belgium, The Netherland, India, Germany, The UK and Thailand.
In monetary terms, PMS accounted for N237.27 billion of import spending in Q3 2015. The value of food import, including palm oil, wheat, fish, Cane sugar meant for sugar refinery, rice, mixtures of odoriferous substances (of a kind used in the food or drink industries), was N135 billion.
But its gladdening that industrial machines, transportation equipment and telecommunications equipment also contributed immensely to the value of import. What makes these equipment important is that they actually contribute to local production and in most cases, Nigeria has no capacity to produce them.
On the website of the Nigeria Custom Service, there are two lists of prohibited items. The first is termed the “Import prohibition list” while the other has the title “Goods: the importation of which is absolutely prohibited.”
Much is what is contained in both lists are either dangerous cargo which cannot be exposed to ordinary citizens or commodities that can be produced locally. But many analysts have argued that there are commodities coming into Nigeria which clearly should be on the prohibition list.
What Nigeria exports
The agriculture component of export is still subdued to a number of food and cash crops namely, roasted cocoa beans, Sesame seeds, superior quality raw cocoa beans, leather, cashew seeds. The country also export light manufactured food items like soft drinks (including Coca-Cola, Pepsi, etc), noodles, packaged beverages (especially to countries in the West African Sub-region), etc.
Data provided by the NBS shows that the country exported certain categories of agric food/light manufactured food items worth N25.3 billion in Q3 2015, but this is not a match for the corresponding value of oil and gas related export which was put at N2.03 trillion in the same quarter.
Nigeria has been faced with the vagaries of an open economy which has not achieved the critical mass of domestic production to meet locally demand. This situation has exerted pressure on its reserves, currency and inflation numbers.
In its December 2015 Inflation and Consumer Price Index (CPI) Report, the NBS acknowledged that the headline index increased by 9.6% (year-on-year), 0.2% points higher from rates recorded in November.
“The increase in the Headline index was driven in part by higher prices within key divisions which contribute to the index. In particular, imported food items within the Food & Non Alcoholic Beverages Divisions; Alcoholic Beverage, Tobacco and Kola; Clothing and Footwear and Transportation (as a result of intermittent PMS supply shortages) divisions all impacted the index,” the statement said.
Two weeks ago, the Central Bank released a statement decrying the rate at which the country’s external reserves have depleted.
According to the CBN, “…the last we had oil prices at about US$50 per barrel for an extended period of time was in 2005. At that time, our average import bill was N148.3 billion per month. In stark contrast, our average import bill for the first nine months of 2015 was N917.6 billion per month, even though oil prices are now less than US$35 per barrel.
The net effect of these combined forces unfortunately is the depletion of our foreign exchange reserves. As of June 2014, the stock of Foreign Exchange Reserves stood at about US$37.3 billion but has declined to around US$28.0 billion.”
In response to the depletion of the reserves, the apex bank took a number of countervailing actions including the prioritization of the most critical needs for foreign exchange, restricting its forex allocation to critical expenditure items including petroleum products, critical raw materials, plants, equipment, payments for school fees, etc.
The effect has been that the rate of depletion of reserves has slowed, but we have to look at more current data to know if the import, export mix has changed by any means.
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