High Exchange Rate Leads to 65% Decrease in Cargo Imports at Seaports

• Nigeria’s seaports experienced a 35% decline in imports, primarily due to foreign exchange instability and Naira devaluation, especially affecting bulk cargo terminals
• Experts like Dr. Kayode Farinto and Lucky Amiwero, attribute the decline to exchange rate volatility and emphasize the need for measures to stabilize the forex market

Over the past two weeks, the volume of imports at Nigeria’s seaports has significantly declined, falling to 65%. According to reliable sources, this downturn is attributed to the instability of the foreign exchange rate and the devaluation of the Naira.

The Tin-Can Island Command of the Nigeria Customs Service (NCS) has reported a notable reduction in cargo throughput at the nation’s seaports, which has posed challenges in achieving targeted revenue.

The exchange rate has been a major concern, with the black market seeing a dollar valued at N1,200, while the official Nigerian Foreign Exchange Market (NAFEM) rate stands at N848. The Naira’s depreciation against the US dollar has been a consistent trend across various market segments, notably since the Central Bank of Nigeria (CBN) lifted the ban on 43 items that were previously restricted from accessing foreign exchange through the Investors’ and Exporters’ (I&E) window, now known as NAFEM.

Seaport reports indicate that berths at Apapa and Tin-Can Island ports are largely vacant, especially in bulk cargo terminals. Truckers have also voiced concerns about a reduction in cargo haulage, particularly at these two busiest ports in the country.

Yusuf Liadi, a truck owner, expressed the difficulties faced in recent weeks, mentioning that the movement of cargo-laden containers had reached an all-time low. He stated, “The last four weeks have been challenging for truck owners. For instance, I have not moved cargoes out of the port in the last two weeks.”

In an exclusive conversation with LEADERSHIP, Dr. Kayode Farinto, the former acting president of the Association of Nigerian Licensed Customs Agents (ANLCA), noted that importation had dwindled to 65%. He attributed this decrease to the exchange rate’s volatility. However, he believed that removing restrictions on the 43 items by the Central Bank of Nigeria (CBN) would stimulate imports.

Farinto emphasized that this policy change would encourage importers to adhere to proper procedures, curbing false declarations, corruption, and the additional costs associated with cargo clearance. He anticipated that the full impact of this change would not be felt until the middle of December 2023 or the first quarter of 2024.

Lucky Amiwero, the president of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), echoed the sentiment of a significant drop in imports at the country’s seaports. He emphasized that the current exchange rate, exceeding N1,000 to a dollar, deterred importers from engaging in international trade.

Amiwero explained that the fluctuating exchange rate created uncertainties and added financial burdens to importers who had to pay more if there were changes in the exchange rate before cargo clearance. He emphasized the critical role of foreign exchange in a country heavily reliant on imports like Nigeria.

Amiwero called for confidence-building measures to stabilize the forex market, noting that the current economic dynamics required a consistent, predictable, and transparent exchange rate. He also stressed the need to address issues affecting exports, removing impediments, and introducing subsidies to encourage a balance between imports and exports.

In conclusion, he highlighted the increasing poverty rate and declining purchasing power in Nigeria, which demanded immediate attention and practical solutions from the government to halt the free fall of the Naira.