Revenue from Nigeria’s ports may beat initial estimates this year after the country abandoned a peg on the naira in favour of a more flexible, market-driven exchange rate policy, to alleviate dollar shortages that had been hurting businesses.
“By floating the naira and appointing primary dealers that are going to make dollars available, people can continue their businesses, which is good for the ports,” the Chief Executive Officer of the Nigerian Ports Authority (NPA), said in an interview with Bloomberg.
“Once the economy is moving, I will get much more,” he said, referring to 2016 earnings projections.
Cargo traffic at Nigeria’s sea ports declined 9.6 per cent to 78.3 million metric tons in 2015 as importers struggled to obtain foreign-exchange due to capital controls and oil prices slumped, the NPA said in April. The agency cut this year’s expected revenue to $1.2 billion compared with $1.8 billion realised in 2015, owing to “challenges” facing the ports, Abdullahi said.
The Central Bank of Nigeria allowed the currency of Africa’s biggest economy to float freely on Monday following a June 15 announcement that it would let a market-driven exchange rate alleviate the dollar shortage that has strangled companies and contributed to the contraction, for the first time since 2004, of the gross domestic product during the three months through March. The naira gained 0.7 per cent to 280.50 per dollar as of 11.28 a.m. in Lagos on Tuesday after declining 29.6 per cent on Monday.
The new foreign-exchange policy, “may cause naira volatility but it will eventually stabilise,” Abdullahi said.
The government must find a solution to the restiveness in the key oil and gas-producing Niger delta region, he said.
Militants have blown up pipelines in the last few months, sending oil output plunging to an almost thirty year low in Africa’s second-largest crude producer.
The ports authority is dredging the channels leading to the nation’s six sea-ports, increasing depth to an average 14 meters from 9 meters and enabling larger ships to dock, Abdullahi said. “It is cost effective to manage bigger vessels. It gives us economies of scale.”
The NPA is discussing the development of the port of Badagry, a coastal town within Lagos state, with local and international investors, including Maersk Line, Oando Plc and Intels Ltd.
It is also talking with an investor to build a specialized port in Ilaje, in South-western Nigeria, for the export of solid minerals, Abdullahi said.
“We want people to be able to export solid minerals easily, which will help diversify the economy.” He declined to say who the investor was.