BMI believes that Nigeria will need considerable extra container-handling capacity in the coming years as its economy and population continue to grow rapidly. Netherlands-based major terminals operator, APM Terminals (APMT), is looking to serve this need and is committing itself to Nigeria through its project to develop a new deep-sea port outside the commercial capital Lagos. APMT already operates the Apapa Terminal at the Port of Lagos and this new facility is in addition to current expansion works there.
APMT is currently in discussions with the Nigerian Ports Authority (NPA) with regards to a potential site for its new port development. The new facility would be located at Badagry, some 40km west of Lagos. In its first phase (of three), the container terminal at the new port would have two berths totalling 650 metres (m), with a draught of 14.5m of water alongside it. Its annual box-handling capacity would initially be 1mn twenty-foot equivalent units (TEUs), to be expanded on in subsequent phases. Further to the container-handling facilities, the new port at Badagry would also be able to handle ro-ro and general cargo, and have a small free zone.
APMT's CEO for the Africa and Middle East region, Peter Sondergaard, said of the development: 'We hope to be in a position to sign a concession agreement with the NPA early next year and then work on a detailed design and tender process for the project. I would hope that construction could start towards the end of 2013 and for phase I to open during 2016.'
|In Need Of Developed Ports Sector|
|Nigeria Real GDP Growth, % Change|
BMI notes that increased container-handling capacity in Nigeria is much needed. The country, currently Africa's second-largest economy, is set to become its largest in the coming years as its growth rate exceeds South Africa's. Over our medium-term forecast period from 2013 to 2017 we project that annual growth will average 7.1% per annum, and with this will come in large part from strong growth in private consumption, a key driver of containerised goods imports.
Private consumption in Nigeria benefits from a very large population, with millions of young people entering the workforce and entering the peak-consumption stage of their lives. A rising middle class, major investments into consumer-centric industries and government initiatives to help stimulate non-export segments of the economy should all help private consumption growth to remain relatively robust. Making up 60.5% of GDP expenditure in 2012, over our forecast period we forecast that real growth will average a vigorous 7.9% per annum.
The new facility is not the only one looking to benefit from the strong consumer growth outlook in the West African state. APMT are also expanding their existing Apapa terminal to 1mn TEUs per annum, the NPA are developing a port at Ibaka, in the east of the country, and Philippine container terminal operator International Container Terminal Services (ICTSI) has signed a memorandum of understanding with Nigeria's Lekki Port LFTZ Enterprise (LPLE) to operate the container terminal at the Port of Tolarum, which is being developed in Lekki.
|Getting Better Connected|
|Nigeria's Liner Connectivity Index Score, 2004-2012|
Given the strong growth outlook for the country, BMI believes that there is room for all of these developments. Nigeria is expected by the NPA to handle 1.6mn TEUs in 2012, rising to 2.5mn by 2020, though we note that even that figure is small for a population of some 170mn, and we believe that there is room for further investment in Nigerian ports.
It is not only port operators that are showing increased interest in the country. Nigeria's score on UNCTAD's Liner Connectivity Index, which measures how well connected a country is by container-shipping services, has risen steadily since the index's inception in 2004, when China set the baserate of 100. That year Nigeria scored 12.83, and in 2012 that has nearly doubled to 21.81. Maersk Line, the world's market leader in container shipping, has developed a class of ships, the WAFMAX, especially designed for the West African market, capable of carrying a greater number of boxes in shallower draughts. Given the Bodagry site's depth of 14.5m, however, we note that larger container ships will be able to call at the facility also.
As Maersk Line is part of the same AP Moller Maersk stable as APMT, the new port should be able to attract some of the company's services. Further, APMT's consortium of local and international companies that it has put together for the development of the new port comprises Terminal Investment (TIL), which is closely associated with container shipping's number two, Mediterranean Shipping Company (MSC).