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Lagos-Ibadan train

The hike in diesel price has forced the Nigeria Railway Corporation to reduce the number of trips on the Lagos-Ibadan Train Service by about 66.67 per cent, it was gathered on Tuesday.

It was also learnt that the corporation had sent recommendations to the Federal Ministry of Transportation for an adjustment in the transport fare on the train service.

The Managing Director, NRC, Fidet Okhiria, told our correspondent that though the service was still running, its trips had been reduced due to the persistent hike in diesel price.

Diesel prices have risen by over 300 per cent in a few months, forcing transporters of petrol, who power their trucks with diesel, to threaten strike before the prompt intervention of the Federal Government.

The spike in diesel price also warranted some level of petrol scarcity in Abuja and neighbouring states, as many truck owners could not afford the high cost, a development that made the Federal Government to raise the bridging claims being paid to petrol transporters.

Speaking on the impact of the high cost of diesel in the rail sector, Okhiria told our correspondent that the NRC had to cut down its trips, particularly on the Lagos-Ibadan route.

“The Lagos-Ibadan train service is running but we have reduced the number of trips on that route because of the diesel problem. We reduced the number of trips we are running because of the hike in diesel price,” he stated.

Asked whether the NRC would raise its transport fare as a result of the increase in diesel price, the corporation’s boss stated that it was outside the powers of the corporation to hike fares.

He explained that it was the responsibility of the Federal Government to make such decision, but noted that the NRC had made recommendations for adjustments.

Okhiria said, “We just can’t increase it by ourselves. The government has to do that. We have made some recommendations. But even the recommendations we made, the new price of diesel has overshot our workings as contained in the recommendations.

“However, we don’t want to price ourselves out of market too, because the price of petrol is not increasing as such, rather the increase is little when compared to diesel price. And you know we are competing with transporters on roads.”

Asked the number trips currently being done on the route, the NRC boss replied, “We are now doing two return trips as against six, which by now should have gone to 10. So we run just two trips now due diesel problem.”

Analysts at Financial Derivatives Company in their latest economic bulletin in August 2022 stated that headline inflation in Nigeria was set to surge again to 19.7 per cent due to the spike in diesel price, among other factors.

“The official headline inflation for July will be released on August 15. Our Lagos market survey and econometric model are indicating that there will be another surge of 1.1 per cent in headline inflation to 19.7 per cent,” they stated.

The analysts added, “If our projections are correct, it will be the 6th consecutive monthly increase and the highest inflation rate since 2006. Apart from the annual inflation rate, month-on-month inflation, which is a more current measure of price movements, is also expected to follow a similar trend, rising to 1.84 per cent (24.52 per cent annualised).

“The most potent causative factors for price inflation in Nigeria today are exchange rate pass through (N667/$), the knock-on effect of the sharp increase in the price of diesel (N780/litre) and to a limited extent the impact of money supply growth and saturation (N48.8trn).”

They, however, noted that the exchange rate weakness at this time appeared to be more potent than other causative factors.

“It has had a 76 per cent impact on the price level compared to diesel (11.6 per cent),” the FDC analysts stated.


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Fuel Pump

The N3.92tn spent as subsidy on Premium Motor Spirit, popularly called petrol, from January 2020 to June 2022 is higher than the cumulative individual federal budgets for health, education and defence during the 30-month period.

Findings show that over the last 30 months, Nigeria has spent more on fuel subsidy than on either the health, defence or education ministries.

An analysis of petrol subsidy expenditure and ministerial budgets from January 2020 to the first half of 2022 indicated that while the Federal Government spent N3.92tn to subsidise PMS during the period, its budgets for education, health and defence during the same period were N2.28tn, N1.68tn and N3.06tn respectively.

This shows that the government spent more funds on petrol subsidy in the 30-month duration than what the health, education or defence sectors got in the same review period.

Further analysis showed that in 2020, the combined budgets of health, education and defence was N1.922tn, while fuel subsidy alone gulped N450bn.

Fuel subsidy spending, however, jumped in 2021 to N1.43tn, whereas the combined budgets for health, education and defence in that year were estimated at N2.288tn.

In the first six months of this year, the government spent N2.04tn on fuel subsidy, while the cumulative budgets for health, education and defence stood at N2.81tn.

Economists as well as oil and gas experts told our correspondent that the Nigerian fuel subsidy impact was not just taking a huge toll on education, health and defence, but wondered whose interest it was really serving.

They were not comfortable with the persistent rise in Nigeria’s fuel subsidy amidst the country’s high indebtedness and other economic challenges.

They explained that the fuel subsidy cost over the last 2.5 years represented a lost opportunity to invest in key capital resources to raise the literacy, standard of living and security of the average Nigerian.

“Nigeria’s fuel subsidy programme has continued to limit remittances to the Federal Account Allocation Committee by the Nigerian National Petroleum Company Limited for distribution to the Federal Government, states and local government areas,” the President, Petroleum Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, told our correspondent.

Analysts believe that many Nigerians are shouldering the cost of education, health and security through sundry private arrangements, while fuel subsidy offers zero succour.

They explained that a better incentivised workforce in the health, education and defence ministries was possible by realising savings from subsidy removal or reduction.

They also stated that civil service’s compensation and the national minimum wage remained a delicate topic as the ongoing strike by the Academic Staff Union of Universities underscored the need to address and lay to rest the civil service compensation and incentives conversation.

The PUNCH, for instance, exclusively reported recently that the Nigerian Economic Summit Group had raised concern of impending fiscal crisis in Nigeria following the continued rise in fuel subsidy.

It disclosed this in its September 2022 report titled, “The State of Nigeria’s Economy,” stressing that the Federal Government’s huge fuel subsidy spending had been a drain on the country’s revenue despite the rise in crude oil prices in 2022.

The NESG said the government should cut its fiscal deficit to avert an impending fiscal crisis, highlighting the gradual withdrawal of fuel subsidy as one of the measures to achieve this.

“Embark on the gradual phasing out of the fuel subsidy programme,” the economic think-tank told the Federal Government, stressing that sustaining the programme was “disastrous.”

It added, “Aside from taking a clear position on the fuel subsidy issue, the Federal Government must begin the shutting down phase of subsidy programmes to save the country from impending fiscal crisis.

“Understandably, this suggestion will affect the welfare of the citizens, but it is only in the short term. On the other hand, the more extended effects of sustaining this programme are disastrous.”

On his part, the Chief Executive Officer, Centre for the Promotion of Private Enterprises, Dr. Muda Yusuf, stated that the government should accelerate the implementation of the Petroleum Industry Act, 2021.

The PIA calls for the halt of petrol subsidy, but the government has not implemented that aspect of the Act after passing it into law since August last year.

“The oil and gas sector reform, which is now being anchored on the Petroleum Industry Act, should be accelerated in order to ensure the unlocking of the enormous value in the oil and gas sector, particularly the gas sector,” Yusuf stated in his remarks on the Nigerian economy after 62 years.

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Nigeria’s 36 states may attract investments and boost industrial activities as the World Bank Board approved the sum of $750m to strengthen the Business Enabling Environment across the country.

Coming under the State Action for Business Enabling Reforms (SABER) programme, the development according to the Special Adviser to the President on Ease of Doing Business/PEBEC Secretary, Dr. Jumoke Oduwole, in a statement, cuts across four reform areas with Disbursement Linked Indicators covering improving land administration and land investment process; improving the business enabling infrastructure; increasing sustainable large-scale investments; and enabling firm operations.

SABER is a three-year performance-based intervention jointly designed by the PEBEC Secretariat and the World Bank Technical team with support from the Federal Ministry of Finance, Budget and National Planning (FMFBNP) Home Finance Department, and the Nigeria Governors’ Forum (NGF) Secretariat.

“All participating states and the FCT could potentially receive a maximum of $52.5m during the 3 years.

“There have been extensive engagements with the States by the PEBEC Secretariat and other programme partners to strengthen the programme design and the State’s capacity to deliver on the expected results” the statement added.

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Air freighters offloading consignments at the cargo section of Murtala Muhammed International Airport (MMIA), Lagos… recently

• Air freight import-to-export ratio slumps to 87:13 • Stakeholders condemn overseas ban of local yam, beans, smoked fishes, ginger, others • Regulators squeak under staff shortage, multiple guidelines, poor compliance with standards • Single guideline, better cooperation imperative, say FAAN, NEPZA

Almost a year after The Guardian report on foreign airlines departing Nigerian shores empty, the situation has changed, but for the worse. Today, more airlines are departing without exportable goods, much to the pains of stakeholders and loss of foreign exchange earnings worth billions of dollars yearly.

The Guardian findings showed that besides mails that topped cargo net export in 2021, the country slumped in the export of agricultural produce following high rate of rejections and prohibitions overseas over poor packaging, documentation and alleged noncompliance with set standards.

Compared to the import-to-export ratio that was given as 66:34 in 2017, last year’s ratio stood at 87:13, though movement of goods through the airports had increased by 56 per cent compared to 2020.

While regulators blame exporters for failure of due diligence, operators push back on regulatory bottlenecks, one-too-many local agencies and conflicting guidelines, high cost of freight, multiple charges and extortions even on goods that are not prohibited.

The Nigerian Export Promotion Council (NEPC) earlier this month, led an inter-agency team to the United Kingdom on a fact-finding mission as part of efforts to address issues that inhibit the growth of Nigeria’s non-oil export sector and curb incidences of export rejects.

Executive Director/CEO of NEPC, Dr. Ezra Yakusak, who led the team, lamented that the cases of rejection had resulted in stricter inspection regime on Nigerian exports in the importing countries and in some cases led to the suspension or ban of some products.

“It also attracted unfavourable international media attention, gave the country a negative image as well as constituted financial burden to the exporters, who had to bear the cost of either reshipping the banned products to Nigeria or destroying it,” he added.

Indeed, the International Air Transport Association (IATA) lately estimated a massive post-pandemic recovery surge in air cargo globally. African airlines lately saw 11.6 per cent volume increase compared to that of 2021, given the upward growth in export.

In Nigeria, findings show that the export of international air cargo has been on the decline since 2017. Five years ago, the country had an import-to-export ratio of 66:34. It dropped to 84:16 in 2018; 86:14 in 2019, 89:11 in 2020 and 87-to-13 in 2021.

Though demand volume spiked by 52 per cent in 2021, a total of 217.8 million kg was freighted through the air. About 188.74 million kg were imported and only 29 million kg worth of goods were exported.

The imbalance leaves the country as the fifth busiest cargo airport on the continent, with Jomo Kenyatta International Airport, Kenya, leading. Cairo International Airport in Egypt is second, followed by Oliver Reginald Int’l Airport, South Africa and Addis Ababa Bole Int’l Airport, Ethiopia.

A recent visit to the cargo section of the Murtala Muhammed International Airport (MMIA), Lagos, confirmed the surge in the number of airplanes that import cargo into the country. However, three out of every four now depart without exportable goods.

A source, who did not want to be mentioned, said, “it is not for complete lack of exportable goods from the cargo sheds. There are goods coming in bits, but they are too small for what the airliners require.

“You cannot be offering a 100 to 200 tonner aircraft five to 10 tons and expect the operator to pay $35,000 charges just to pick five tons. That is a loss. Instead of paying so much for so little, it pays them to fly with bags of sand instead and for free,” he said.

Chief Executive Officer (CEO) of Chisco Logistics, Obinna Anyaegbu, who spoke at the Chinet 22 Aviation and Cargo Conference in Lagos, recently, noted that the logistic services and airlines need more produce/products for export, as there is a low supply for freight services.

“There is a lack of supply and marketing of our produce and products globally. Trust me, the Chinese people want to eat our pineapples, bananas, plantains and so on. We have some of the tastiest and most nutritious fruits in the world; but demands and supplies are not meeting right now.

“While cargo planes and bellies of passenger planes fly empty, fruits are rotting away on farms. These are serious gaps. About two years ago, during the COVID-19 lockdown, our vehicle-service was down, we leased aircraft to lift cargo on Lagos-Accra-Lagos route. It was a 14-tonner 737 aircraft but we were struggling to get two tonnes a week. So, the export is not there.

“We observed that the biggest player on the route was DHL and they are bringing about 70 to 80 tons of cargo into Nigeria and moving it across West Africa. So, it is mostly imported goods that are moving via the African routes. Kenya is taking out a lot (export) and they have a great supply contract. This is because they meet the international standards,” Anyaegbu said.

Exporters, however, said there is sufficient cargo potential for global market off-takers but for prohibitions, yet unresolved and bureaucratic bottlenecks barring volume exporters from the airports.

For instance, Nigerian dried white and brown beans have been prohibited in European Union member-states in the last five years. This is not connected with the possession of pests and chemical pesticides that are allegedly injurious to health.

Also banned in the EU, The Guardian learnt, are sesame seeds, melon seeds, dried fish and meat, peanut chips and palm oil.

The American government has since March 2018 banned the export of smoked catfish and other fish products from Nigeria over lack of adequate documentation to support the exports as and when due. Catfish Farmers’ Association of Nigeria (CAFAN) said the market is worth over N20 billion, yearly.

Air freighters offloading consignments at the cargo section of Murtala Muhammed International Airport (MMIA), Lagos… recently

Still on the rejection list, according to exporters, are: some variants of Nigerian yam, hibiscus flowers (for zobo drink), mushrooms, bitter leaf, pumpkin (ugu) leaf, waterleaf, garden eggs, shelled groundnut, crayfish and others.

The Shippers Association of Lagos estimated that the seized or prohibited items make up 82 per cent of Nigeria’s exportable agro-allied produce. Nigeria and other developing countries are expected to lose between $12 and $15 billion by 2025 to rejected exports, according to the World Bank.

President of the Shippers association, Jonathan Nicole, noted that many of the goods were allegedly exported illegally and rejected for not having government clearance. Meanwhile, some of the prohibited produce still gain warm reception when routed through neighbouring African countries like Ghana, where they are well-packaged, face less hassles and are comparatively cheaper to export.

Chief Executive Officer of ABX World, Capt. John Okakpu, said despite kick-off of the African Continent Free Trade Agreement (AfCFTA), Nigeria is still not primed to benefit from its export potential.

“Our hibiscus (zobo) export crippled some time ago when Mexico banned it. That is because almost 100 per cent of the export goes through Mexico to the world market. Our ginger from Kachia in Kaduna goes via India and Pakistan to the world market.

“The biggest nightmare is our yam. Nigeria tops the charts with about 67 per cent of global yam production, dwarfing Ghana’s 10 per cent. Yet, Ghana contributed 94 per cent of the total yams exported from West Africa and 22 per cent of global exports in 2019. This is a big shame.”

A year ago, The Guardian reported complicated roadblocks mounted by government agencies in the form of extortions, harassment and multiple charges on export goods, causing international cargo airlines to prefer flying out of Nigeria empty. Among the 16 sundry charges tracked for goods coming in or departing the country via airports, only five are officially recognised.

Besides Nigerian Civil Aviation Authority (NCAA), Federal Airports Authority of Nigeria (FAAN), Port Health, Quarantine and Customs, the following agencies also collect unofficial charges en bloc: Anti Bomb Squad of the Nigeria Police Force, National Agency for Food, Drug Administration and Control (NAFDAC), Standard Organisation of Nigeria (SON) and National Drug Law Enforcement Agency (NDLEA).

Chairman, Export Group of Lagos Chamber Commerce and Industry (LCCI), Bosun Solarin, said bureaucracy and cumbersome regulations had made it almost impossible for exporters to thrive, adding that Nigeria should blame itself for rejected goods.

“Should we continue to allow badly processed and packaged items/goods through those cargo sheds? No wonder our products receive negative comments outside the country,” Solarin queried.

She advised government and its multiple agencies to deemphasise revenue generation, describing the current levies as stifling. She mentioned that NAFDAC charges businesses about N40,000 for each product, with a cap of only five products per producer.

“Why restrict businesses that have the capacity to do more products? If the business wants to add the sixth product, they are charged N90,000 for NAFDAC certification. Why?”

A member of the Association of Export Agents, Olufemi Kayode, also regretted that the country had not taken deliberate efforts to develop processing and export zones to international standards.

“Our terminals are in complete chaos and unkempt for international export. Go to SAHCO and NAHCO terminals in Lagos and see for yourself. The micro and small-scale exporters are not being attended to. So, we have the terminal been patronised by only individual exporters.

“Only 60 per cent of what comes through the airports are informal trade and people will cut corners because the system is allowing them. Yet, the same stake and system are against small-scale businesses. No one has good knowledge of packaging, that is why our goods are being rejected or destroyed abroad,” Kayode said.

Officials of the Nigeria Agricultural Quarantine Services explained that the mandatory guidelines are clearly stated online. “But most exporters are always looking for shortcuts. More so, we are grossly understaffed to fully monitor the processes from the farm, to storage, packaging, and export – as provided for in the guideline.”

Assistant Director, Investor Promotion, Nigerian Export Processing Zone Authority (NEPZA), Augustine Onyekwere, admitted that, unfortunately, air transport and export sections are still suffering the old malaise of multiple charges, and perhaps now at its higher levels.

Onyekwere said government agencies had put up many bottlenecks to make it very difficult for air cargo sector to thrive.

“Until these hurdles are crossed, government efforts to attract more revenue into the gross domestic product (GDP) will not materialise. That is the reason the air cargo sector is not thriving and costs the country $250 billon on agro-export produce to the country alone,” he said.

Onyekwere added that it was to solve those problems and entice investors that the Federal Government had designated five airports as special economic and free trade zones.

“Unfortunately, most of the (government) agencies do not understand the workings of a free trade zone,” he said.

Aviation Security Consultant, Group Capt. John Ojikutu (rtd), however, disagreed with the idea of designating already busy airports as free trade zones, while there are idle dedicated cargo airports.

Ojikutu noted that there are 22 federal airports with an average of 16 million passengers yearly; five international airports with 80 per cent of the annual passenger traffic and 90 per cent (200,000 metric tons) of air cargo traffic out of over 100 million tons available nationwide.

“But there are 13 designated as cargo airports with less than 10,000 tons yearly, yet not one of them is considered for Export Processing Zone (EPZ) nor Economic Free Zone (EFZ), but the international airports that are also joint-users with the Nigerian Air Force (NAF); with multiple federal agencies, mostly located in complicated urban development areas and complicated security control. Who is doing these to us unilaterally, using the President’s name always? Who will save us from ourselves?”

Managing Director of FAAN, Capt. Rabiu Yadudu, said an aviation cargo guideline should be the starting point to correcting the wrongs and mistakes that had been impediments over the years.

“In this document, we should be able to identify these impediments and chart an implementable action plan that will be followed by all stakeholders to achieve our common goal, which is to reverse the deficits in imports/exports ratio and domestic cargo distribution.

“In my opinion, having an operational single window for export will be a starting point and FAAN is willing and able to provide the enabling facilities,” Yadudu said.

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