BMI View: We forecast strong growth across all freight modes in Nigeria in 2016 and beyond. Increasing demand for consumer goods by an expanding middle class and manufacturing sector will raise intermodal container volumes. Population growth means growth in demand will continue, driving investment into the freight sector, with substantial interest in developing the country ' s dilapidated rail network in addition to investment in the road and air freight infrastructure. We forecast a real GDP expansion of 3.8% in 2016 while Nigeria continues to struggle with its readjustment to low oil prices. Some policies being pursued by the president and the Central Bank will further constrain growth in the near term.
Economic growth in Nigeria will be weighed down by foreign exchange controls, an overvalued naira and policy uncertainty, all of which will serve to reduce investment in Africa's largest market. We forecast real GDP growth of 3.8% in 2016, following an estimated 3.3% in 2015. This is a marked slowdown on the 6.2% averaged over the five years to 2014, reflecting the impact that the Q214 collapse in the oil price has had on the Nigerian economy. Oil has in recent years accounted for over 70% of fiscal revenues and 90% of exports, but with Brent crude set to average USD56 per barrel (/bbl) in 2016 and USD55/bbl in 2017, following a projected USD57/bbl in 2015, Nigeria must adapt its economic model from the days when oil averaged well over USD100/bbl. Nigeria's current account balance will remain in deficit in 2016, as exports will fail to recover from the 2014 oil price collapse. The deficit will narrow from 2015 however, as an inevitable naira devaluation will limit imports.
Trade growth is bouncing back after four consecutive years of contraction, the last two of which were due to the collapse in oil prices with the commodity accounting for 90% of Nigeria's exports. Nigerian imports are on the rise, as the demand for both consumer and capital goods continues to increase. Higher incomes and a rising middle class, along with a greater availability of foreign exchange due to increased investment and high oil prices, should ensure that import growth remains robust. A key driver will be the Nigerian consumer, with strong growth in retail and telecoms expected to continue. The non-oil sector will continue to outperform oil, especially given the challenges to Nigerian oil exports. The country has lost its key export market thanks to the shale revolution in the US. Overall, however, total exports will continue to outstrip total imports until the end of our forecast period, resulting in a positive contribution on headline GDP from net exports. With a forecast growth slowdown for exports in 2019 however, imports will outpace exports for a short period and only in 2019.
Road freight is the dominant freight mode in Nigeria, accounting for as much as 99.93% of the overall freight mix, with air and rail representing around 0.04% each. There will be strong growth in volumes across all freight modes in 2016 and beyond as increasing demand for consumer goods by an expanding middle class and growing manufacturing sector will raise volumes. Investment in rail in particular will allow Nigeria to redevelop its dilapidated rail infrastructure, decomissioning old lines and developing new ones, making the freight mode increasingly important over the longer term. Given the time it can take to transport goods on unpaved roads, the rail sector will help boost overall volumes in Nigeria. Air freight will also see restructuring and investment over the medium term, allowing for the strongest growth of all freight modes.
President Muhammadu Buhari's All Progressives Congress performed well in Nigeria's gubernatorial elections earlier this year, winning 20 of the 29 states on offer. Outgoing President Goodluck Jonathan's People's Democratic Party (PDP) won nine. The results enhance Buhari's reform mandate and provide his party with control of governorships across the country, apart from the oil-producing south, which remains loyal to the PDP.
South African lawmakers are concerned that the fine imposed by Nigerian authorities on South African telecoms firm MTN Group for its alleged violation of the country's laws, will negatively impact trade between the two states.
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.
Headline Industry Data
2015 air freight tonnage is estimated to grow by 10.7% and forecast to grow by 9.3% in 2016, reaching 293.4mn tonnes.
2015 rail freight tonnes is estimated to grow by 7.6% and forecast to grow by 6.8% in 2016 to reach 272.9mn tonnes
2015 road freight tonnes is estimated to grow by 3.8% and forecast to grow by 4.1% in 2016, to 805.4mn tonnes.
2015 trade value is expected to contract by 25.14% in 2015 as a result of falling oil prices, but is forecast to bounce back and grow by 11.49% in 2016.
The Nigeria Freight Transport Report has been researched at source, and features latest-available data covering commercial transport and logistics by road, rail, air and water; industry forecasts, company rankings covering leading national and multinational operators; and analysis of latest industry trends, opportunities, projects and regulatory changes.
BMI Research's Nigeria Freight Transport Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Nigerian freight transport and logistics industry.
- Benchmark BMI's independent freight transport industry forecasts on Nigeria to test other views - a key input for successful budgetary and planning in the strategic freight transport market.
- Target business opportunities and risks in the Nigerian freight transport sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Nigeria.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs, and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering freight transport and logistics, regulatory changes, major investments and projects and significant national and multinational company developments.
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the freight transport sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2008-2012) and forecasts to end-2019 for all key industry and economic indicators (see list below), supported by explicit assumptions plus analysis of key downside risks to the main forecast including:
- Transport Sector: Total freight carried by road, rail, inland waterways, maritime, air and pipeline (mn tonnes-km/mn tonnes).
- Trade: Exports and imports (USDmn) by category of goods (manufactured goods, food, chemicals etc.); top five import and export trade partners (USDmn); imports/exports to each global region (USDmn)
- Port Data: Throughput (‘000 tonnes) for all major ports in the state.
- Oil Products Prices: Price forecasts for gasoline and aviation fuel (USD/bbl) at all major global energy trading hubs.
- Economic Indicators: Nominal GDP (USDbn); real GDP growth (%); GDP per capita (USD); industrial production (%); unemployment (%)
Details of the freight infrastructure in each state by segment (road, rail, air, water and pipelines). Full analysis of the competitive landscape within each segment.
Industry Trends and Developments
Analysis of the latest projects across the freight transport sector (road, rail, air, sea and logistics) including a market overview which provides an outline of the key elements driving development.
The Freight Transport market reports contain a chapter detailing the political outlook of a given region, examining the domestic politics, long-term outlook and foreign policy, and assessing the impact this could have on freight and transport businesses.
Examines the short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses.
The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Freight Transport reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.