Harsh Economy Has Reduced Imports – CEO, Genesis Shipping

The Chief Executive Officer of Genesis Shipping, Mr. Michael Oyekanmi, has revealed that Nigeria’s harsh economic climate has significantly reduced the volume of imports into the country. Oyekanmi, while addressing industry stakeholders, explained that the ripple effects of various economic challenges, including rising inflation, foreign exchange volatility, and the high cost of doing business, have made it increasingly difficult for companies to import goods as they did in previous years.

According to Oyekanmi, several factors are at play, contributing to the sharp decline in imports, which, in turn, has negatively impacted the shipping and logistics sector. He noted that businesses are struggling to maintain their import levels due to difficulties in accessing foreign exchange, as well as the increased cost of shipping, customs duties, and overall operational expenses.

Forex Crisis and Import Decline

One of the key factors behind the decline in imports is the ongoing foreign exchange crisis that has gripped Nigeria’s economy. With the naira weakening to historic lows—trading at 1,705 naira to the US dollar in the parallel market as of recent reports—the cost of acquiring foreign currency has skyrocketed. Oyekanmi explained that businesses, particularly those that rely heavily on imports, are finding it almost impossible to purchase foreign exchange at affordable rates. This has resulted in many companies reducing their import activities to avoid incurring unsustainable costs.

“The forex crisis has been a significant blow to importers,” Oyekanmi said. “With the naira so weak, businesses have to spend much more to acquire the same amount of foreign exchange that they used to. This has led many to scale back on imports, and some have even ceased operations temporarily.”

He added that the scarcity of foreign exchange has not only affected the availability of goods in the market but has also increased the cost of imported goods, thereby pushing inflation even higher. Consumers are now bearing the brunt of these increases, with prices of essential goods such as food items, electronics, and pharmaceuticals surging.

Rising Shipping Costs and Global Supply Chain Disruptions

Apart from the foreign exchange issue, Oyekanmi highlighted the rising cost of shipping as another major factor contributing to the decline in imports. Over the past year, global shipping costs have soared due to various factors, including the lingering effects of the COVID-19 pandemic, supply chain disruptions, and geopolitical tensions affecting trade routes. These challenges have driven up freight rates, making it more expensive for Nigerian importers to bring goods into the country.

“Shipping rates have increased drastically, and this is a global issue,” Oyekanmi said. “The cost of moving goods from Asia, Europe, and even within Africa has gone up significantly. This, combined with the already challenging economic conditions in Nigeria, has made it very difficult for businesses to justify the high costs of importing goods.”

He explained that many Nigerian businesses are being forced to pass these additional costs onto consumers, contributing to the current inflationary pressures in the country. For many importers, the high shipping costs, when coupled with forex challenges and customs duties, have become untenable, leading to a slowdown in import activities.

Customs Duties and Operational Costs

The CEO of Genesis Shipping also pointed out that the cost of clearing goods at Nigerian ports has become a major burden for importers. He explained that customs duties, port charges, and other associated fees have increased steadily over the years, making it increasingly expensive to import goods into the country.

“In addition to forex and shipping costs, importers are also faced with high customs duties and port charges,” Oyekanmi noted. “This is creating a perfect storm for the shipping industry, as importers are struggling to meet their financial obligations, and many are choosing to cut down on their import volumes.”

He further explained that operational costs for shipping companies have also risen due to fuel price hikes and other inflationary pressures. This has added to the overall cost of running shipping operations in Nigeria, making it harder for businesses to remain profitable in the current economic climate.

Impact on the Shipping and Logistics Sector

The reduction in imports has had a direct impact on the shipping and logistics sector in Nigeria. Oyekanmi stated that shipping companies are experiencing a drop in business, with fewer goods coming into the country. This has led to reduced revenues for shipping firms and could potentially result in job losses if the trend continues.

“The shipping industry relies on a steady flow of goods, and with imports declining, we are seeing a reduction in business activities,” he said. “This is a worrying trend because it could lead to job losses and even the closure of some shipping companies if the situation does not improve.”

He also pointed out that the decline in imports has affected the entire supply chain, from shipping companies to freight forwarders, customs agents, and other stakeholders in the logistics industry. With fewer goods to move, the entire sector is feeling the strain of the economic downturn.

Calls for Government Intervention

In light of these challenges, Oyekanmi called on the Nigerian government to take urgent steps to address the economic issues affecting the import sector. He urged the government to implement policies that would stabilize the naira, improve access to foreign exchange, and reduce the cost of doing business in the country.

“We need the government to step in and create a more favorable environment for businesses to operate,” he said. “This includes addressing the forex crisis, reducing customs duties, and improving the ease of doing business at the ports.”

He also emphasized the need for long-term solutions that would reduce Nigeria’s dependence on imports by promoting local production and manufacturing. According to Oyekanmi, investing in local industries and supporting businesses that produce goods domestically could help reduce the country’s reliance on foreign goods and improve the overall economy.

“Ultimately, we need to focus on building our local industries so that we don’t have to rely so heavily on imports,” he said. “This will not only reduce the pressure on foreign exchange but will also create jobs and stimulate economic growth.”

Conclusion

As Nigeria continues to navigate its economic challenges, the decline in imports is a clear indication of the difficulties businesses are facing. With rising costs across the board—foreign exchange, shipping, customs, and operations—importers are struggling to maintain their activities, which has far-reaching implications for the economy. The shipping and logistics sector, in particular, is feeling the impact, as fewer goods are being moved, and the future of many businesses in the industry hangs in the balance.

While short-term government interventions may help alleviate some of the pressures, long-term strategies that promote local production and reduce dependence on imports will be critical to ensuring the sustainability of the economy. For now, companies like Genesis Shipping and others in the sector will continue to adapt to the challenging conditions, hoping for a turnaround in the near future.