2013-09-20 08:56:33 - New Transportation research report from Business Monitor International is now available from Fast Market Research
Nigeria's budget deficit is expected to narrow in 2013, to 1.5% of GDP, compared to an estimated 2.3% in 2012, on the back of improved revenue collection. However, risks are to the downside. Unforeseen expenditures, most notably the large military push in the northern states of Borno, Yobe, and Adamawa to root out militant groups like Boko Haram will exert pressure on the government's finances, with a possible knock on effect on the shipping sector.
Nigeria is Africa's leading oil producer, which enables it to maintain a healthy surplus in the trade account. This, accompanied by recent moves to limit some types of food imports, will keep the current account safely in the black over the coming years. We are forecasting
a current account surplus of 8.3% of GDP in 2013, compared to 8.0% in 2012.
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Nigeria's shipping industry is expected to perform strongly between 2013 and 2017, with the Port of Lagos set to remain the country's largest in terms of tonnage throughput. We have stuck to our forecasts from last quarter and so continue to foresee the largest annual growth occurring at the Port of Tincan Island (10.79%), while Nigeria's other main ports are all set to enjoy a profitable 2013. We forecast growth at Lagos of 6.48% and at Harcourt of 5.18%.
Annual GDP growth forecasts averaging 7.1% per annum between 2013 and 2017 and a population reaching close to 170mn people present a consumer demand picture in Nigeria which is driving container shipments up, increasing the pressure on Nigeria's ports. Partial privatisation has helped eliminate overstaffing at the ports, cargo theft and excessive port-related charges, in addition to unlocking funds for infrastructure improvements, which were the main challenges faced by the port authority.
Headline Industry Data
* 2013 Port of Lagos tonnage throughput is forecast to increase by 6.48%.
* 2013 Port Harcourt tonnage throughput is forecast to increase by 5.18%.
* 2013 Port of Tincan Island throughput is forecast to increase by 10.79%.
* 2013 trade growth forecast at 7.40%.
Key Industry Trends
APMT Meets State Officials Over Investment: Senior officials at APM Terminals (APMT) have met with the Nigerian Federal Minister of Industry, Trade and Investment Olusegun Aganga and a delegation of government officials as part of ongoing negotiations on port infrastructure investment.
Concessionaires' Investments In Facilities Reach NGN148bn: Total investments by concessionaires in Nigerian seaport facilities have reached around NGN148bn (US$925mn) since 2006, reported Sun News in June 2013. The investments were focused on terminal development, as well as the acquisition of cargo handling equipment, and are aimed at increasing efficiency of the Nigerian maritime sector.
NIMASA Finally Removes Blockade On Bonny Channel: The Nigerian Maritime Administration and Safety Agency (NIMASA) finally removed a blockade on the Bonny channel in order to stop access of LNG vessels to Nigeria LNG Limited's (NLNG) loading bay on Bonny Island. The blockade had prevented all LNG vessels from leaving or entering the area until the fulfilment of all statutory obligations.
Key Risks To Outlook
Piracy remains a persistent problem around the coast of Nigeria and adds slight downside risk to our forecasts. Armed pirates attacked a Nigerian-flagged oil products tanker, MT Matrix, offshore Nigeria on June 1, according to unidentified security sources. The gunmen also kidnapped an unknown number of crew members. A total of 12 Pakistani and five Nigerians were onboard the MT Matrix when it was hijacked by the pirates near the coast of oil-producing Bayelsa state. Meanwhile, the rising acts of piracy in the Gulf of Guinea region have increased costs for shipping companies operating in the region.
In terms of upside risk to the Nigerian shipping sector, the new port of Lekki, once it is completed, is predicted to raise significant funds. That is the assertion of the managing director of the Lekki Port Enterprise, Haresh Aswani, who also claimed that the project would create almost 163,000 new jobs. Built for an estimated US1.55bn, Aswani explained that the port would 'spur the economic development around the Lekki sub-region and on a wider perspective, the whole of Lagos state through rapid industrialisation'. Aswani also stated: 'In addition to bridging the capacity deficit, Lekki Port will have a significant positive macroeconomic impact estimated at US$361bn over the entire concession period. It is expected to contribute more than US$200bn to the government exchequer.'
In other positive news for the Nigerian shipping sector, a total of US$2.9bn has been approved by Nigeria's Federal Executive Council (FEC) for construction of phase four of the Onne Oil and Gas Port in Port Harcourt, Rivers State, it was announced at the end of June 2013. The project is expected to reduce congestion at the Lagos and Port Harcourt ports. The concession period of 25 years would be solely prefunded by Messrs Deep Offshore Services Nigeria. The project, which is scheduled to be completed in six years, would create 4,000 jobs during its execution, and a further 20,000 direct and indirect jobs on completion, according to Minister of Information Labaran Maku.
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