There will be strong growth in freight transport volumes in Nigeria in 2015 and beyond. Strong real GDP growth, increasing demand for consumer goods by an expanding middle class and a growing manufacturing sector will all raise intermodal container volumes. The country's ongoing population growth will power this. The growth in demand is driving investment into the sector, with substantial interest not only in developing new ports and expanding old ones, but also reinvigorating the country's dilapidated rail network. Road and air freight infrastructure are also seeing new investment.
Headline Industry Data
2015 air freight tonnes-km forecast to grow by 10.7% and to average 9.6% to 2019.
2015 port of Lagos tonnage throughput is forecast to increase by 5.9% and to average 5.3% to 2019.
2015 rail freight tonnes-km to grow by 7.6% and to average 7.1% to 2019.
2015 trade growth forecast to contract by 6.9% as a result of falling oil prices.
Key Industry Trends
Rail Studies Highlight Sector Growth Potential
Nigeria's rail sector exhibits all of the traits that underpin our view that rail infrastructure across Africa will be a key area of investment. Six planned studies into new rail corridors linking population centres and economic hubs are a key element of the government's economic transformation plan and will boost our already positive forecasts for the rail sector.
Nigerian Port Sector Looking Buoyant
The Nigerian port infrastructure sector looks set to enjoy considerable growth over the coming years after comments from the Minister for Transport highlighted seven potential deep water seaports in the pipeline. Some plans are already well developed, but others add upside to our buoyant port sector forecasts. We forecast 9.9% real growth in the sector over 2014 and will now look to upgrade the average growth rate of the sector over our forecast period up to 2023, which currently stands at 6.7%.
CMA CGM To Invest USD300mn In Lekki Container Terminal Project
The CMA CGM Group is set to invest nearly USD300mn in the development of the Lekki container terminal project in Nigeria. The upgrade of the terminal will raise the level for operators in the country and open up the Nigerian maritime sector for investments by foreign players. Moreover, once the Lekki terminal project is completed, additional employment opportunities will be generated, according to Denis Laure, CMA CGM's deputy vice president in charge of Africa and the Indian Ocean.
Key Risks To Outlook
In terms of downside risk, BMI believes that a concerted effort must be made by West African states if the growing piracy problem in the region is to not escalate any further. Any failure to curb this growing crisis could come to affect regional economic activity, as evidenced by the fact that product tanker companies are now charging charterers premiums to operate in the region.
Other downside risks come from the risk of violence as the February 2015 election approaches. Equally, should falling oil prices come to weigh more heavily on the Nigerian economy than we currently expect then consumer demand would be affected.