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Nigeria Freight Transport Report 2010Published by: Business Monitor International Published: Jan. 6, 2010 - 51 Pages Table of Contents
AbstractNigeria's maritime sector is set to expand due to growing credit lines between ship owners and the country's financial sector, according to an October 2009 report by Vanguard, cited by Hellenic Shipping. Nigeria's commercial fleet is under developed relative to the country's size and currently ill-equipped to meet its growing trade needs. According to the report, an increasing number of Nigerian banks are beginning to move into the shipping finance sector, spelling good news for the country's shipping lines which have seen opportunities for expansion limited, by poor access to credit. Leading domestic financial organisations including Diamond Bank, Finbank and Skye Bank have built up Nigerian shipping portfolios over the past two years, the latter recently financing the first domestically-owned cargo vessel to sail from the US to Nigeria. In 2004, the government introduced the Cabotage Act, requiring all coastal and domestic shipping activity to be carried out by Nigerian-owned vessels with local crews. However, until now, the act has done little to increase the total share of domestic companies operating within Nigeria's shipping sector. BMI notes that Nigeria's commercial fleet in fact decreased in size between 2004 and 2007, falling from 676,000 deadweight tonnes (DWT) to 524,000 DWT during the period. Although Nigeria operates the largest commercial fleet in Sub-Saharan Africa, its fleet remains small relative to its population of 149mn and the volume of seaborne trade to and from the country. Since our last report, we have adjusted our GDP growth forecasts for Nigeria. The global economic slowdown and lower crude oil prices pulled down the growth rate in 2009. BMI estimates GDP growth was 4.7% in 2009, and forecasts that it will recover to 6.4 % in 2010 before accelerating further to 7.4% in 2011. For the 2010-2014 period we now expect growth to average 6.5%, faster than the 5.9% rate registered in the preceding five-year period. The effect on our freight traffic forecasts for the period as a whole, relative to the immediate past, is therefore moderately positive. Reliable freight transport statistics are thin on the ground in Nigeria. In an attempt to draw an overall picture, we have revised BMI freight carried estimates for road haulage, shipping, and pipeline throughput. We continue to see road haulage constrained as a result of the poor state of the road network, although there will be some recovery as privately run toll roads are introduced. Rail freight will also be held back because of the investment slump in this sector - the government’s announcement of a recovery programme will not boost traffic for some years yet.Sea freight will broadly lead GDP by a few points, supported by relatively dynamic trade patterns, but local shipping will remain uncompetitive. There has been an improvement in the airfreight sector, following the catastrophic accidents of late 2005. We remain cautious in our projections for pipeline throughput, given the range of attacks on pipeline infrastructure, which have led to significant cuts in Nigerian crude oil exports. Combining all these factors our conclusion is that total freight volume across the different modes, measured in million tonnes-km, will rise by an annual average of 6.6% in the 2010-2014 forecast period, a little ahead of GDP. According to our latest estimates, transport and communications GDP rose by 3.2% in 2009, slower than overall GDP, which we estimate to have increased by 4.7%. For the 2010-2014 forecast period, we expect the transport and communications sector to be volatile. It will achieve average annual growth of 6.5% in value terms, on a par with GDP. The total value of transport and communications GDP will rise to US$13.9bn in nominal terms by 2014, representing 3.5% of Nigeria’s GDP (a low proportion compared with the Africa region as a whole). Nigeria has deep ethnic, religious, and regional divisions that make effective governance and implementation of economic policy difficult. Although there is government awareness of the importance of the transport system and the authorities have spoken of the pivotal role played by transport in generating economic growth, there is a track record of lack of commitment to instigate reforms, as well as a significant shortfall in pledges of financial resources. The latter are needed to enable repairs and maintenance to take place because the Nigerian freight sector is beset with an infrastructure that is costly in time delays. Extension of the transport network in terms of new infrastructure and facilities requires even greater financial resources. Our expectation is that maritime freight will be one of the stronger-growing transport modes in the forecast period, with average annual growth in million tonnes-km of 6.6%, behind airfreight at 7.6%, and road haulage at 7.2%, and ahead of pipeline throughput at 6.5%, and rail freight at 3.3%. Get Full Details About This Report >> |
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