Jide Akintunde, Managing Editor/CEO, Financial Nigeria International Limited

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Charting the Lower River Niger opens investment opportunities for Nigerian trade 28 May 2023

On 16 March 2023, the Federal Ministry of Transportation, in conjunction with Nigerian Export-Import Bank (NEXIM Bank), African Export-Import Bank (Afreximbank), Nigerian Navy, and National Inland Waterways Authority (NIWA), hosted the unveiling ceremony of the new navigational charts of the lower River Niger. The hydrographic survey that produced the charts flagged off in Lokoja in December 2021. From the confluence town of rivers Niger and Benue, situated in the tropical wet and dry savanna of North Central Nigeria, the survey covered areas extending southward to Burutu, which lies on the coast of Niger Delta.

The production of the nautical charts was part of the many initiatives by stakeholders for enabling a safe operational launch of Sealink project. Sealink is a special purpose vehicle (SPV) being facilitated by NEXIM Bank to promote inland waterways operations for both Nigerian hinterland and intra-coastal trade. The SPV is being facilitated as a public private partnership to significantly broaden the national export basket, enhance bulk export capabilities, and ensure the effective participation of the country in intra-African trade.

Symbolic and practical significance

The Managing Director and CEO of NEXIM Bank, Abba Bello, described the unveiling ceremony as a showcase of the outcome of an indigenous survey and production of paper and electronic charts to ensure navigational safety of lower River Niger channel to boost trade. The Nigerian Navy had expressed its commitment to producing the charts to internationally acceptable standards.

When the present-day Nigeria was a territory of imperial Britain, rivers Niger and Benue served as major economic enablers that effectively supported the colonial administration. British merchants considered the rivers as the most navigable river channels in the colonial territory. On its part, the port at Burutu served as a link between river transport and the sea. It was a port terminal used by the famed Royal Niger Company and UAC for export cargo consolidation. The terminal was also used for discharging goods from ships for onward water transport to river ports in Northern Nigeria and neighbouring French territories, through the two rivers.

But in post-colonial Nigeria in the mid-1970s, the Burutu port fell into disuse. The river channel it served for mercantile trade was also neglected. This led to the siltation of the channel over the following years, resulting in navigational challenges.

The newly unveiled charts are expected to provide a guide on the current state of the navigability of the river channel. They will also advise on the necessary actions for improving the channel, in order to support the commencement of commercial operations on it, especially for the regional Sealink project. According to Mr. Bello, the information provided from the outcome of the survey and charting activities would reassert the huge inland waterways potentials and opportunities for investment in Nigeria’s maritime infrastructure.

Inter-agency cooperation

The Minister of Finance, Budget, and National Planning, Zainab Ahmed, said the federal ministry in 2019 adopted the Sealink project as one of the “ministerial deliverables” towards the implementation of the priority projects of the government. As she reiterated in her goodwill message at the unveiling ceremony, the project will enhance the development of the Nigerian maritime industry and significantly contribute to the GDP.

Nonetheless, the delivery of Sealink requires inter-agency cooperation and support, given the expansive scope of the project, covering trade facilitation, navigable waterways, private sector investment, transport administration, and maritime safety. It is noteworthy that, with the facilitation of NEXIM Bank, multiple government agencies, including the Federal Ministry of Transportation, NIWA, Nigerian Navy, Nigerian Maritime Administration and Safety Agency (NIMASA), and others, have supported the implementation of Sealink.

The support of Afreximbank has also been instrumental. The pan-African trade finance institution provided a grant of US$350,000 towards the hydrographic survey and charts production. In 2015, the African Development Bank (AfDB) had also provided financial assistance of US$302,000 to conduct further feasibility studies on the project to extend it to the Economic Community of Central African States (ECCAS), following the backing of the Economic Community of West African States (ECOWAS). Broad private sector support for Sealink has been provided by industry associations, including Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Lagos Chambers of Commerce and Industry (LCCI), Manufacturers Association of Nigeria (MAN), and Federation of West African Chambers of Commerce and Industry (FEWACCI).

Trade and the economy

According to United Nations Conference of Trade and Development (UNCTAD), over 80 percent of the volume of international trade in goods is carried by sea, and the percentage is even higher for most developing countries. However, the maritime industry contributes less than 1 percent of Nigeria’s GDP.

In 2021, trade accounted for 23 percent of the Nigerian economy, well below the world’s and Sub-Saharan Africa’s (SSA) averages of 57 percent and 45 percent, respectively, per data from World Bank. Squaring the trade data for Nigeria – Africa’s most populous country and largest economy – with SSA’s data, the capacity for Nigeria to grow its trade in multiple folds become very stark.

Improving Nigeria’s international trade data can unlock jobs and foster prosperity. A 2019 study by Business Roundtable found that international trade contributes nearly 39 million American jobs, representing one out of every five jobs in the United States. Information by Office of the United States Trade Representative (USTR) also shows that very $1 billion in new exports of American goods supports more than 6,000 additional jobs at home. While a sizeable proportion of Nigerians are employed in trade, the sector is dominated by informal activities that do not yield good income.

Sealink is poised to provide a new vista for Nigerian trade growth, first by promoting and attracting private sector investments in maritime logistics infrastructure. “The opening up of the inland waterways will no doubt significantly complement and help to decongest other freight corridors and port gateways that are currently under severe pressure,” said Mrs. Ahmed. Other benefits of Sealink include its serving as a catalyst for Nigeria’s economic diversification agenda.

Beneficiary sectors

Speaking during the unveiling ceremony for the charts, Remmy Nwachukwu, Manager, Trade Finance, Anglophone West Africa at Afreximbank identified solid mineral and other commodities as beneficiary sectors for trade enabled by the utilisation of Nigeria’s inland waterways. According to him, the Sealink would represents “the beginning of a new life to businesses in the country requiring hauling various commodities and solid minerals from the hinterlands to the seashores for processing or for export.”

Highlighting other investment opportunities of the project, Mr. Nwachukwu mentioned the dredging of the channel (which requires the support of the government) and deployment of suitable vessels for evacuating commodities from the hinterland. Financial institutions, including Afreximbank, can work with investors to mobilise bankable projects for investments in broader marine logistics, which ties perfectly with coastal marine logistics support of the bank’s intra-African trade funding strategy.

In closing his remarks, NEXIM Bank’s CEO expressed the strong commitment of the bank to ensuring that the strategic objectives of the regional Sealink project is fully realised, beginning with the commencement of its pilot operations in due course.

Jide Akintunde is Managing Editor, Financial Nigeria. He is also Director, Nigeria Development and Finance Forum.