CBN BDC forex ban: Cost of shipping imported items to rise as port revenue shrinks - THE SUN
•Purchasing power’ll be eroded, consumers to pay more –Akinola
By Steve Agbota [email protected] 08033302331
Stakeholders in the maritime sector have expressed concerns that the cost of shipping containers into Nigerian ports will likely soar due to the recent policy of the Central Bank of Nigeria (CBN), restricting sale of foreign exchange (forex) to Bureaux De Change (BDC) operators.
Already, Nigerian ports are currently experiencing a drastic drop in cargo throughput. The policy, according to stakeholders will compound the situation, as it would grossly affect the annual port revenue because the volume of cargo throughput will be dropped more.
>span class="s2">Before the announcement of the ban, already importers found it difficult to bring in cargoes due to the rise in dollars and freight charges, as shippers pay over $14,000 to bring in a 40ft container from China, as against the $5000 they used to pay.
Meanwhile, an expert in the shipping who doesn’t want his name in print, said under the Cabotage trade, ship chattering, Nigerian Ports Authority (NPA) charges, Nigerian Maritime Administration and Safety Agency (NIMASA) charges are paid in dollars.
“This means that for people involved in shipping, CBN has to create a window for them to quickly access funding apart from the window already available from the banks. If that fails and vessels arrive Nigeria and they are time-bound, these businesspersons will be forced to buy the dollar at any rate.
“For instance, to take a product of 15,000 metric tonnes from Lagos to Calabar will be about $26,000 per day amounting to $260,000 for a period of ten days. It will be difficult to walk into a bank and demand $260,000 to quickly pay shipping charges. The banks will ask such customer to open Form A and bid for it. The bank wouldn’t be able to certify that bid in less than six months.
“The vessel would hold your product for that period and your demurrage charges will be $26,000 daily for the delay. Under such circumstances, any business person would be willing to buy dollar at any rate, even if it is N1000 per dollar,” he said.
Speaking with Daily Sun, the spokesperson of the Seaport Terminal Operators Association of Nigeria and the Chief Executive Officer of Ships and Ports Communication Company, Bolaji Akinola, said certainly, the policy is going to affect the value of the naira, adding that it erode purchasing powers because people will now have to pay more importer imported goods.
According to him, it is a form of signal CBN is sending out that in essence to reduce the amount of dollars CBN is pumping out into economy since they will now be selling through the commercial banks.
“What that implies is that those who rely on foreign exchange through the parallel market and the BDCs, they have now to go and source it in the black market.
Don’t forget, CBN has a list of items that you cannot import and it will not allocate forex for those commodities through the banks.
“What it means is that the importers of those commodities will source forex for those commodities through the black market because there is local demand for those commodities and they are not rightly ban. So you can still bring it in legitimately expect that you look for forex on your own,” he added.
He added that the importers of those commodities will source forex from the black market and that means there will be more pressure now on the black market and when demand is higher than supply, prices skyrocket.
He said there is going to be a lot of pressure on the parallel market for importation and cost of dollars will go up and Naira will depreciate the more and that is going to ultimately affect the cost of importation into Nigeria and it becomes more expensive to bring in goods.
However, the National President, Africa Association of Professional Freight Forwarders and Logistics in Nigeria (APFFLON), Otunba Frank Ogunojemite, said that Nigeria is an importing nation, and naira is getting weaker, adding that for one to buy dollar, it costs more naira.
He said that at the end of the day, when consignments arrive in Nigeria, it would cost inflation, adding that per capital income is not increasing.
According to him, if people cannot import, the prices of goods in circulation will be tripled and the consequence will not be palatable, adding that the situation needs intelligence solutions if the government wants the economy to be stable because it seems the government is losing control of the economy.
He said that there are a lot of things that the government needs to put in place if they want things to be all right because now the Naira is about 520 per dollar at the black market.
He said that if there is no demand, there is no way the dollars will be rising in the black market, adding that since the dollar is rising, that means the demand is more than the supply.
He said that the dollar has kept rising in the country for the past two years, saying that government is not doing anything to ameliorate the situation.
President, National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, said that the CBN is yet to get its policies right. Hence it should go back to the drawing board to strengthen the policy to allow for seamless import procedures.