Unstable foreign exchange nearly crippled Nigeria’s shipping in 2024 – Centre

Fwdr Eugene Nweke

Nigeria’s maritime industry in 2024 witnessed the lowest investments in recent years because of turbulent and unstable foreign exchange rate. Investors found it difficult to predict where to put their money in.

The situation was further complicated by heavy reliance of the industry on foreign exchange with most of its transactions denominated in foreign currency – Dollar.

These assertions are contained in a report on the activities of the industry published by Sea Empowerment Research Center RGT, this January. The title of report is – A Critical Review of the Nigeria Maritime Industry (Performances and Issues) in 2024.

The report, signed by the Centre’s Head of Research, Fwdr Eugene Nweke, Rff, maintained that the industry has been facing significant challenges due to the increasingly unregulated foreign exchange rate but 2024 was rather a turbulent one to all commercial activities.

According to Fwdr Eugene Nweke, a seasoned freight forwarder, in the paper, “the capital-intensive nature of the industry requires a substantial amount of capital to keep it afloat but the unpredictable foreign exchange rate has made it difficult for investors to ascertain the risks and revenue generated.

“This has resulted in a reduction in investment options as investors are wary of putting their money into an industry with such high risks.

“The lack of funding has been a major issue with the industry requiring significant investment to modernize and expand its infrastructure.”

Nweke, who is also the Secretary of Customs Consultative Council (CCC), added “The Nigerian Ports Authority (NPA) for instance, needs to upgrade its ports to meet international standards, especially, a deliberate pursuant to attaining “regional trans-shippment hub status “within the West and Central Africa sub-region.

“However, the unregulated foreign exchange rate has made it challenging to secure the necessary funding.

“The situation is further complicated by the fact that the industry is heavily reliant on foreign exchange with most of its transactions being denominated in foreign currencies.

“The shipping and freight sector has also been affected with the unpredictable foreign exchange rate making it difficult for companies to budget and plan for the future.

“The cost of importing goods has increased significantly and the lack of stability in the foreign exchange market has made it challenging for businesses to operate efficiently.

“The situation is exacerbated by the fact that Nigeria is a major importer of goods and the high cost of imports has had a ripple effect on the entire economy.

“Furthermore, the unregulated foreign exchange rate has also affected the country’s ability to attract foreign investment in the maritime sector. Investors are hesitant to put their money into an industry with such high risks.

“The absence of stability in the foreign exchange market has made it challenging for the country to compete with other countries in the region.”

On the solution, Nweke, a former President of National Association of Government Approved Freight Forwarders (NAGAFF), said “the Nigerian government needs to take urgent steps to address the issue of the unregulated foreign exchange rate and provide a stable and predictable environment for investors to operate in.”