BMI View: Despite the fact that total trade is on the decline in Nigeria at present, and has been since 2011, the country ' s main ports are, however, set to experience healthy enough growth over the short to medium term.
The outperforming Nigerian port in terms of year-on-year (y-o-y) growth is set to be Port Harcourt (7.45%), which takes the top spot slightly ahead of the port of Apapa (7.27%) and the port of Sapele (7.13%) in 2015. Nigeria's second largest port by tonnage throughput terms, the port of Tincan Island, will, however, have a poor 12 months, ending the year with y-o-y growth of just 0.45%.
Crude petroleum is by far and away Nigeria's largest exported good and so the news that there will be lower oil export revenue will lead to a reduction in both private consumption and fixed investment this year and next, which will keep growth in the shipping sector relatively constrained - 2009 and 2011's double digit growth will not be repeated over the medium term.
Headline Industry Data
2015 port of Lagos (Apapa) tonnage throughput is forecast to increase by 5.51% to reach 24.60mn tonnes.
2015 port of Harcourt tonnage throughput is forecast to increase by 6.53% to reach 5.64mn tonnes.
2015 port of Tincan Island throughput is forecast to increase by 1.24% to reach 16.38mn tonnes.
2015 total trade is forecast to contract by 14.28%.
Key Industry Trends
Work To Start On Lekki Port - Construction is set to start at the proposed Lekki Deep Seaport project in Lagos Free Trade Zone (LFTZ), Ibeju-Lekki, Lagos State, Nigeria. Lekki Port LFTZ Enterprise issued the notice-to-proceed to its contractor China Harbour Engineering LFTZ Enterprise to begin work at the site. The project is estimated to cost USD1.65bn. The port facility will initially have an annual throughput capacity of 1.5mn twenty-foot equivalent units (TEUs), which will later be increased to 2.7mn TEUs. Work is expected to take 41 months to complete. Lekki Port is scheduled to open in 2019.
STOAN Says Fuel Shortage Might Hamper Port Operations - The Seaport Terminal Operators Association of Nigeria (STOAN) has warned that the ongoing fuel crisis in Nigeria could hamper port operations. 'It is sad to note that it is becoming increasingly difficult for our members to replenish their diesel stock due to the lingering scarcity of the product. If this situation persists, it will adversely affect operations at the port, affect discharge of vessels and delivery of cargo,' said the association's spokesperson, Bolaji Akinola, reported Business Day Online in May 2015.
Maersk Seeks Port Contracts In Nigeria And Kenya - Danish business conglomerate AP Moeller-Maersk Group seeks to secure contracts for building and upgrading ports in Nigeria and Kenya. The company is awaiting a final approval on a contract to build a new port in Badagry, Lagos, Nigeria, according to Senior Vice President for Africa Lars Reno Jakobsen. 'That project, once it's been finalised, could be more than USD2bn in terms of investment,' Jakobsen said (Fresh Plaza). The company is expected to start work on the project in late 2015.
Key Risks To Outlook
President-elect Muhammadu Buhari's impressive victory at the polls provides him and his All Progressives Congress (APC) with a strong platform from which to implement his ambitious reform agenda. Using its commanding majority in both the upper and lower houses of Nigeria's bicameral National Assembly and riding on post-election goodwill, we expect the incoming government to make some early progress on stated policy priorities such as petroleum industry reform, boosting fiscal accountability, tackling corruption and reforming the power sector.
Such reforms are critical if Nigeria is to have any hope of overcoming the major structural challenges it faces - namely a reliance on (dwindling) oil exports and a dearth of productive capacity. The country's shipping industry will, therefore, be keeping a keen eye on developments as it relies on the transportation abroad of such exports.