Category: General News

The overarching objective of port development in Nigeria is to improve port infrastructure, by focusing on improving infrastructure, efficiency, and technology to boost economic growth and facilitate trade, with a goal of Nigeria becoming a regional transshipment hub. 

 The Nigerian maritime sector has over the past 2 years undergone several developments. These include the introduction of Naira-based petroleum product sales by the NPA, the establishment of a One-Stop-Shop for efficient coordination, the appointment of new port managers, and the construction of inland dry ports like the Gateway Inland Dry Port in Ogun State.  

 In 2025, key developments in Nigeria’s maritime sector include efforts to improve maritime safety and security, infrastructure upgrades, and promoting indigenous shipowners, with initiatives like the Deep Blue Project and the Nigerian Maritime Industry Working Group (NIWG) playing a crucial role. 

 The following are a more detailed look at some key developments from 2024 -2025: 

 Safety and Security 

The Nigerian government and the Nigerian Maritime Administration and Safety Agency (NIMASA) have been working to enhance maritime security, including initiatives like the Deep Blue Project and collaboration with the Nigerian Navy to combat piracy and other maritime crimes.  

 

Safety Standards 

NIMASA has focused on enforcing safety standards, training, and awareness campaigns to educate operators and passengers on safety practices.  

 

Marine Environmental Pollution 

The government is taking measures to address marine pollution and protect the environment, including efforts to prevent oil spills and other forms of pollution.  

 

Infrastructure and Development. 

Port Modernization and Efficiency 

The objective is to combat major challenges of infrastructural deficiencies, corruption and inefficiency within the port sector. 

Infrastructure Challenges 

The lack of adequate infrastructure, including roads and rail networks, has hampered port operations.  

 

Capacity Constraints 

 Ports have struggled to handle the increasing volume of cargo, leading to congestion and delays.  

 

Infrastructure Development 

 Efforts are underway to upgrade Nigeria’s six ports namely Apapa, Tin Can Island (both in Lagos), Onne, Port Harcourt (both in Rivers State), Warri (in Delta State), and Calabar (in Cross River State) to decongest traffic, and attract larger vessels, with public-private partnerships encouraged for port modernization and infrastructure development with the overall objective of revenue generating and efficiency.  

 

The critical aspects of the port modernization are:  

 Rehabilitation and Renovation: The government is prioritizing the rehabilitation and renovation of existing port facilities, including quay walls, berths, and storage areas.  

 

Deep-Sea Ports: Development of deep-sea ports to accommodate larger vessels and modern shipping trends is a key focus.  

 

Rail Linkages: Establishing rail linkages to all ports is crucial for efficient cargo transportation and intermodal synergy.  

 

Technology and Automation 

 Digitalization: The Nigerian Ports Authority (NPA) aims to fully digitalize port operations by 2025.  

 E-payment and E-SEN: Implementing e-payment and Electronic Shipping Notice (E-SEN) systems for streamlined processes.  

Port Service Support Portal: Standardizing cargo handling and import-export operations through a portal to improve efficiency and transparency.  

 

Efficiency and Capacity 

 Improved Turn-Around Time: Efforts are underway to reduce vessel turn-around time and cargo dwell time in ports.  

 Enhanced Cargo Handling: Modernizing cargo handling equipment and procedures to improve efficiency.  

 

Private Sector Participation 

 Concessioning of Terminals: The government has implemented a policy of concessioning port terminals to private operators to improve efficiency and attract investment.  

 Public-Private Partnerships: Encouraging public-private partnerships for infrastructure development and modernization.  

 

Private Sector Participation – Specific Projects 

Badagry Deep Sea Port: A deep-sea port project in Badagry is in the pipeline, awaiting Federal Executive Council approval.  

Lagos Ports Modernization Project: The NPA is collaborating with ITB-HITECH Joint Venture to modernize the Lagos ports.  

 

Private Sector Participation – Key Players 

 The key players are;

 Nigerian Ports Authority (NPA): The government agency responsible for developing, owning, and operating ports and harbors.  

 

Federal Ministry of Transportation: Oversees the port sector and implements policies for modernization.  

 

Private Terminal Operators: Companies that operate port terminals under concession agreements. 

  

Nigerian Shippers Council: A government agency that promotes the interests of shippers and works towards improving port efficiency.  

 

 Floating Dock Project 

 NIMASA is partnering with the Nigerian Ports Authority (NPA) on the Floating Dock Project, which aims to provide economic benefits through employment and training opportunities.  

 

Investment in Maritime Infrastructure 

The government is investing in maritime infrastructure, including the acquisition of specialized mission patrol aircraft and vessels, as well as a command and control center.  

 

Indigenous Shipowners and Economic Growth. 

Empowering Indigenous Shipowners 

 The government is working to empower indigenous shipowners and increase local tonnage in the maritime sector with particular focus on the following areas: 

Cabotage Act 

The Cabotage Act reserves the commercial transport of goods and services within Nigerian coastal and inland waters to vessels flying the Nigerian flag owned by Nigerians and built in Nigeria.  

 

Marine Tourism 

NIMASA is promoting marine tourism as a key area for economic development, urging stakeholders to invest in relevant areas.  

 

Manpower Development 

NIMASA is focusing on manpower and human capacity development, including the training of seafarers and naval architects.  

 

NIMASA NSDP 

The Nigerian Seafarers Development Programme (NSDP) was created by NIMASA in 2008 with the mandate to train Nigerian youths to become seafarers and naval architects.  

 

 For further enquiries kindly contact the F.O. Akinrele & Co. International Trade, Shipping & Transport Group – info@foakinrele.com 

Between 2023 -2024, Nigeria experienced extreme exchange rate volatility with unprecedented erosions of Naira values against foreign currencies particularly, the US Dollar, GBP Sterling and the Euro. 

At the commencement of the term of the current government in May 2023, a floating exchange rate regime was introduced allowing market forces to determine the value of the Naira. The intentions were very well placed in view of the prevailing regime of multiple exchange rates in the previous government from 2015 – 2023. 

Under the previous government, unbridled foreign borrowing and a multiple exchange rate regime resulted in the erosion of foreign and domestic investor confidence. Huge gaps had arisen between the official and unofficial rates causing severe shortages of foreign exchange. This, coupled with the effect of COVID, signaled a dysfunctional economy. 

In May 2023, at the inception of the current floating exchange rate regime, the exchange rate was N460.70 – $1.  

The unified multiple exchange rate window was established to enhance efficiency in the FX market but initially, the rates significantly unraveled, dropping to N 1390.00 – $ 1 in May 2024 and then to an all time low at N 1,738.74  – $ 1 in November 2024 with the inflation rate at 34.8%. 

Heavy speculation between unlicensed persons in Naira and hard currencies resulted in unprecedented volatility and erosions in Naira values in turn causing major dislocations to domestic and foreign commerce in a still heavily import dependent economy.  

The situation was compounded by other factors including the removal by the Federal Government of fuel subsidies in 2023 and the prevalence of large volumes of Naira in circulation through monetary policies of the previous regime. 

Attempts to Stabilise Exchange Rates 

Significant attempts to stabilise the Naira and improve foreign exchange liquidity have been made. They include; most significantly, the clearing of the vast overhang of Nigeria’s due dollar obligations of approximately $7 billion. The clearing of the vast forward payment of $6.8 billion for Naira. The successful clearing of the aforementioned have given foreign investors comfort and confidence by easing prolonged pressure on the Naira, continually burdened by speculative demand for the dollar. 

There have also been oversight and regulatory and policy interventions by the CBN in the Official Market through a series of guidelines, such as the Central Bank of Nigeria’s (CBN) order to Banks to sell their excess dollar stock and maintain certain levels of prudential thresholds. 

Another key measure was the introduction in February 2024 of a new policy restricting international oil companies (IOCs) from repatriating 100 percent of their foreign exchange proceeds abroad immediately, limiting them to only 50 percent of their proceeds immediately while the other 50 percent will be repatriated 90 days from the day of inflow. 

Additionally, measures have also been taken to prevent foreign currency racketeering, foreign exchange rate manipulation, money laundering and the financing of terrorism by stopping the proliferation of unregulated transactions through robust monitoring a number of Bureaux De Changes (BDC), under the regulatory guidelines titled  “REVISED REGULATORY AND SUPERVISORY GUIDELINES FOR BUREAU DE CHANGE OPERATIONS IN NIGERIA.” 

 The aforementioned cluster of measures individually and cumulatively laid the foundation for the stabilisation of the foreign exchange market. 

Electronic Foreign Exchange Matching System (EFEMS) 

 The EFEMS initiative, which was officially introduced on October 3, 2024, represents the boldest and most far reaching move by the CBN to address longstanding issues of speculation and lack of transparency in the foreign exchange market. It encourages compliance with all rules that pertain to making the foreign exchange market open and transparent to investors. After a test run in October-November 2024, it became fully operational in December 2024.  

EFEMS requires all foreign exchange transactions to be conducted through this platform and therefore enables real-time order matching among banks and ensuring supply-demand data is openly available.  

The objective of EFEMS is to reduce speculative activities and eliminate market distortions, allowing the CBN to exercise regulatory oversight and effectively regulate the FX market. 

The CBN also launched the Nigerian Foreign Exchange (FX) Code, a comprehensive guideline aimed at ensuring transparency, integrity, and accountability among Authorised Dealers.  

The FX Code introduces six core principles: Ethics, Governance, Execution, Information Sharing, Risk Management and Compliance, and Confirmation and Settlement Process.  

The code supports the overall objective of EFEMS by mandating banks to show their real-time quotes and matching orders and promoting a fair and robust FX market, leading to more transparency and efficiency.  

The CBN Governor recently stressed that the reforms of 2023-2024 have yielded tangible results with remittances through International Money Transfer Operators (IMTOS) rising 79.4 per cent in the first three quarters of 2024 to $4.18 billion, compared to $2.33 billion in the same period of 2023.  

The positive effects of the foregoing basket of measures have been reflected in Nigeria’s external reserve, which grew by 12.74 per cent, reaching US$40.68 billion at the end of 2024. 

For further enquiries kindly contact the F.O. Akinrele & Co. Corporate, Foreign Investment and Capital Markets Group – info@foakinrele.com

Adam Smith, the famous Scottish economist and philosopher in “An Inquiry into the Nature and Causes of the Wealth of Nations”  espoused the virtues of the invisible hand of free markets with little governmental interference.  

The year 2022-2024 and so far in 2025, have witnessed geopolitical headwinds as demonstrated by international trade re-alignments and prevailing global trends towards protectionism between the US and her trading partners. Yet in line with Adam Smith’s core philosophy, Africa must act with renewed zeal and focus on establishing free markets and frictionless trade as epitomised by the African Continental Free Trade Area (AfCFTA) Agreement. 

The AfCFTA remains the world’s largest free trade area since the creation of the World Trade Organization (WTO).  

AfCFTA market projection is significant, with the combined GDP expected to reach US$7 trillion by 2035, and $29 trillion by 2050. The World Bank foresees an increase in foreign direct investment (FDI) in this trade area of up to 111% by 2035. 

The creation and evolution of AfCFTA commenced from the 10th Extraordinary Session of the African Union on AfCFTA in March 2018 where the following agreements were signed into law:  

i. The AfCFTA  

ii. The Kigali Declaration (Agreement)  

(signed by 54 out of the 55 African countries Eritrea being the only country not to have signed nor ratified)  

iii. The Protocol on Free Movement of Persons 

(signed by 32 out of the 55 AU Member States only 4 countries – Mali, Niger, Rwanda, and Sao Tome & Principe have ratified.  

The AfCFTA brings together 8 pre-existing and separate free trade areas and/or customs unions each with different regulations otherwise known as Regional Economic Communities (RECs). 

The 1st of January 2021, marked the start of trading under the AfCFTA.  

The African Continental Free Trade Agreement’s primary objective is to reduce trade barriers between the different RECs of the African Economic Community, and eventually to use these RECs as building blocks for the ultimate goal of an Africa-wide customs union. 

The year 2021 also saw the roll-out of the pilot phase of the Pan-African Settlement System (PAPSS), a combined initiative of African Export-Import Bank (AFREXIM) and the AfCFTA, which was formerly launched in Ghana on 13 Jan 2022.  

PAPSS serves as the continent-wide platform for the processing, clearing and settling of intra-African trades and commerce payments. The system was developed by the AFREXIM and promises to reduce the cost and time of payments, lower the level of banking liquidity required to make payments, and improve central bank oversight of payments. 

The PAPSS in the African regional context functions identically to and complementary to the Swift global payment system. Its objectives like Swift  are speed, cost savings, reliability and dependencies on hard currency. The PAPSS ensures instant or near-instant transfers of funds between originators in one African country and beneficiaries in another. 

Although the 1st of January 2021, marked the start of trading under the AfCFTA Agreement however, no trade has yet taken place under the AfCFTA regime.  

On 7 October 2022, the AfCFTA Secretariat launched the AfCFTA Guided Trade Initiative (GTI) in Accra to allow for commercially meaningful trade under the Agreement to commence for eight (8) participating countries: Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia. This initiative is being used to pilot the operational, institutional, legal and trade policy environment under the AfCFTA, and has since been extended and as at January 2024, 12 State parties have finalised their legal modalities to enable trade under the GTI to commence. 

The GTI is a pilot program that aims to test the legal, trade policy, institutional, and operational environment of the AfCFTA. The program focuses on value chain development and 96 commodities, including tea, coffee, ceramic tiles, processed meat, and sugar.  

The 54 members of the AfCFTA are at different stages of implementation and limited trade has occurred under the GTI. The GTI is a pilot program that matches importers and exporters.  

As at August 2024, 48 countries (including the 4 richest countries on the continent, Nigeria, South Africa, Egypt, Algeria) out of the 54 signatories have ratified the treaty. 

KEY OBJECTIVES 

In 2025, the AfCFTA aims to be fully operational. 

Its key objectives are:  

• A transition from its current foundational phase to full operationalization of a robust trade framework.: 
• Clear steps towards dismantling of barriers to cross-border commerce and the improvement of trade facilitation.  
• Implementation of protocols aimed at empowering women and youth. 
• Strengthening collaboration between AfCFTA member states.  
• The building of capacity in the key AfCFTA institutions to implement   
• Commitment by the AfCFTA Secretariat to a continental private sector platform for SMEs.  

 

KEY CHALLENGES 

A number of key challenges are: 

• Infrastructure gaps, financial constraints, and competition, which impede the expansion of businesses under the AfCFTA.  
• The implementation of the AfCFTA remains slow yet, there remains the potential to increase intra-African trade by more than half by the end of 2025. 
• Political instability through recent coups and political unrest across the Sahel and central Africa have dampened investor confidence and trade potential.  

OPPORTUNITIES  

The AfCFTA represents a major franchising opportunity in Africa, creating a larger, more connected market that could drive significant business growth.  

The AfCFTA through a large unified market will accelerate trade and investments with China and Europe. 

For further enquiries kindly contact the F.O. Akinrele & Co. International Trade, Shipping & Transport Group – info@foakinrele.com 

 

 

As part of our broader perspectives on F.O. Akinrele & Co’s practice areas, we are constantly presented with opportunities to influence legislation and forge a path towards better governance in the Nigerian commercial sector.

Over the past 12 months, our Transport Law Group has been engaged in several legislative initiatives exemplified by the following key federal and state public sector legislative initiatives in the Nigerian maritime and transport sectors: 

The Coastal and Inland Shipping (Cabotage) Act 2003 and the Suppression of Piracy and Other Maritime Offences (SPOMO) Act 2019.

The Cabotage Act 2003

The Cabotage Act primarily reserves the commercial transportation of goods and services within Nigerian coastal and inland waters to vessels flying the Nigerian flag and owned by persons of Nigerian citizenship. The Acts seeks to limit foreign participation in domestic coastal trade and promotes indigenous shipping.

SPOMO Act 2019 

The SPOMO Act aims to deter would-be offenders and protect the integrity of maritime activities. It was enacted in 2019 to combat the problem of maritime insecurity in Nigeria, by preventing and suppressing piracy, armed robbery and other unlawful acts done against a ship, aircraft and other maritime craft, including a fixed or floating platform. It defines acts of piracy, armed robbery at sea, and other unlawful acts perpetrated within Nigeria’s territorial waters and exclusive economic zone (EEZ).

Between 2023 – 2024, we were engaged to lead a critical review of both legislations by the Nigerian Maritime Administration and Safety Agency (NIMASA), the Nigerian government agency responsible for regulation and safety of shipping within the Nigerian maritime and coastal waters.  

The objectives were to substantially review and draft the terms and provisions of both enactments incorporating international best practices in view of new and developing challenges in various aspects of both laws, particularly in field of enforcement. 

The work culminated in the drafting of a Cabotage Bill (2023) and SPOMO Bill (2023) which have since been presented to the Nigerian legislature for debate and passage into law.

The Ogun State Transport Reform Bill

In 2023-2024, the Ogun State government (a state within the western region of Nigeria), through the Nigerian Infrastructure Advisory Facility (a partner to Adam Smith International) engaged our Transport Law Group to conduct a legal and regulatory review of the Ogun State Transport Reform bill. This required a review and appraisal of the institutional and governance structure of the Ogun State transport sector. 

The ultimate objective was to coordinate and enhance productivity and promote a viable concessioning and commercialization regime for the Ogun State transport sector. 

In examining this bill, the main observations were the need for more coherence in the unification of all the transportation organs of Ogun State and the review of extant laws in order to avoid a proliferation of laws and avoid conflicts between Ogun State’s extant transport laws and the Transport Sector Reform Bill. 

Our reform and appraisal report on the Transport Sector Reform Bill has been submitted to the Ogun State government for further legislative steps to be taken.

Participating in legislative initiatives such as this will remain F.O. Akinrele & Co’s priority for many years to come.

 Broader Perspectives and Achievements in 2024: “Corporate Social Responsibility and institution Building” 

The expansion and deepening of our practice areas and our regional goals remain our core objectives. These objectives have over the past two decades, coalesced with the broader perspectives of corporate social responsibilty (CSR), which include our strong commitment to institutions of higher learning in Africa. 

Over the past 12 months, our support for the Oil and Gas Bar of the University of Lagos and the Maritime Law Students Society of the Obafemi Awolowo University has been demonstrated through sponsorship and the involvement of our partners and associates in their key projects and activities. We have also incorporated their members into our extensive law internship programmes. 

A commitment towards such institutions as these and to future generations of lawyers and industry experts remain at the forefront of our practice initiatves. 

These institution building initiatives also act as a trigger to the improvements of our African institutions by enhancing their functions and changing the way people relate to each other in public activities. 

Our plan is to expand these initiatives on a yearly basis to West African institutions of higer learning and then on a regional basis to Sub-Saharan Africa and North Africa. 

Nigeria is Africa’s biggest oil producer but a marginal gas player. In March 2021, the Nigerian government declared the 2020s, Nigeria’s ‘decade of gas’.

The decade of gas policy has signalled Nigeria’s renewed focus on gas as the fuel of choice for powering Nigeria’s industrial ambitions. According to the plan, the Federal Government’s target is to deliver 10 projects that would significantly impact the economy; attract $14 billion in foreign direct investment, raise $12 billion in revenue through royalties and taxes, and create two million jobs by 2030.

Nigeria has the tenth largest gas reserves globally with an estimated 208 trillion cubic feet (tcf) of proven gas reserves according to the Nigerian National Petroleum Corporation, NNPC.

Despite this huge potential, gas production remains relatively low. In 2021, Nigeria produced 1.62 tcf of gas, 50.7 percent of which was exported as liquefied natural gas (LNG), behind Algeria (3.56 tcf) and Egypt (2.4 tcf) who have much smaller reserves.

Nigeria hopes to be a major supplier to Europe as the continent shifts away from Russian gas.

Yet significant challenges remain. Developing a holistic solution to help ensure energy access and security will require improving investor confidence in the sector. Developing a local gas market will require stakeholders and consumers to be confident that gas flows won’t stop abruptly.

The Decade of Gas so Far

Nigeria has implemented several policies aimed at increasing the domestic utilization of liquefied petroleum gas (LPG), compressed natural gas (CNG), and gas-to-power. Some have focused on reducing and commercializing gas flares and developing industrial gas markets.

Nigeria’s energy transition plan sees gas as a key transition fuel that will help meet energy needs in the short term.

In 2020, the NNPC began developing its most ambitious gas project, the Ajaokuta-Kaduna-Kano pipeline. The 614km pipeline is a massive $2.5 billion project that will transport gas from production centers in the south to industrial clusters and production centers in the north.

The pipeline will also provide gas for three planned thermal power stations in Abuja (1,350MW), Kaduna (900MW), and Kano (1,350MW) as well as feedstock for industrial production of petrochemicals and fertilizers. The project was slated for completion in the first quarter of 2023, but the NNPC has extended this timeline to the third quarter of 2023 due to what it described as security and terrain challenges. 

Other key projects being developed include a second Escravos to Lagos Pipeline System which will double the capacity of the current transport network improving supply to about 9 power plants located in its corridor. The Obiafu – Obrikom – Oben (OB3) gas line is also being developed and will improve supply to petrochemical industries. The NNPC’s ultimate goal is to ensure domestic gas utilization of 5 billion standard cubic feet (bscf) daily.

The government is promoting CNG as the key fuel for transport. In 2022, the NNPC announced a plan to convert about 500,000 petrol and diesel vehicles into CNG-powered and deploy 580 gas-filling stations over 18 months. This plan also extends to replacing small diesel and petrol-powered generators, the main energy source for off-grid and underserved customers, with gas-powered alternatives.

Overcoming Market Challenges

To fully achieve the benefits of these initiatives and projects, the government needs to provide solutions to some of the policy and market challenges that have hampered domestic gas utilization.

Gas-fired power plants constitute about 87 percent (about 14GW) of Nigeria’s total installed power generation capacity. However, plants routinely suffer from gas supply constraints. This challenge is linked to the overall lack of liquidity in the power sector and also to the fact that the domestic gas market is a regulated one. When power generation companies are unable to pay and the domestic gas pricing is unattractive, gas suppliers prioritize international buyers that can pay.

A related problem is that there is no incentive for these producers to invest in infrastructure for domestic gas supply. Investments will be limited to off-shore basins that are near export ports. Activated and enforced gas sale and purchase contracts are necessary to make gas projects bankable and spur private-sector investment.

Another key challenge that disrupts gas flow is the sabotage of pipelines by acts of vandalism. Although instances of vandalism have decreased from its height in the 2010s, it remains a huge issue that affects the country, costing money in not only lost products but also repairs. A 2014 report from the U.K.-based Stakeholder Democracy Network (SDN), notes that pipeline vandalism costs oil companies $14bn annually. In October 2022, NLNG declared a force majeure, citing the unavailability of major liquids evacuation pipelines due to sabotage and vandalism.

Developing a holistic solution to natural gas production and supply in Nigeria will ensure energy security and improve investor confidence in the sector. A holisitic solution that creates a thriving local gas market for the power sector will also require more confident stakeholders and consumers.

THE NIGERIA-MOROCCO GAS PIPELINE

A most significant Nigerian gas utilisation project is the Nigeria-Morocco Gas Pipeline which was proposed in a December 2016 agreement between the Nigerian National Petroleum Corporation (NNPC) and the Moroccan Office National des Hydrocarbures et des Mines (National Board of Hydrocarbons and Mines) (ONHYM).

The following are its key details:

• Capacity: 30 billion cubic m/year
• Length: 5,660 km
• Cost: US$25 billion

The pipeline would connect Nigerian gas to every coastal country in West Africa (Benin, Togo, Ghana, Cote d’Ivoire, Liberia, Sierra Leone, Guinea, Guinea-Bissau, Gambia, Senegal, and Mauritania), ending at Tangiers, Morocco, and Cádiz, Spain.

It would be an extension of the existing West African Gas Pipeline, which already connects Nigeria with Benin, Togo, and Ghana. Industry experts have stated that this is a preferred route rather than the Trans-Saharan Gas Pipeline, arguing that the Trans-Saharan Gas Pipeline would have to pass through a region with significant militant activity.

Upon completion, the gas pipeline will be the world’s longest offshore pipeline second longest pipeline overall. Based on the 25-year estimate given in 2017, construction will be completed by 2046. In June 2023 it was reported that Côte d’Ivoire, Liberia, Guinea, and Benin had signed agreements with Morocco and Nigeria to participate in the Nigeria-Morocco gas pipeline project. The signing ceremony took place at the Economic Community of West African States (ECOWAS) headquarters in Lagos, Nigeria, alongside the steering committee meeting for the Nigeria-Morocco gas pipeline project, which was attended by representatives from ECOWAS and all the relevant countries. Following this development, a total of ten states are now involved in the project, building upon the agreements previously signed with ECOWAS, Mauritania, Senegal, Gambia, Guinea-Bissau, Sierra Leone, and Ghana.

In 2024, exchange rate volatility has reached unprecedented levels. With unprecedented erosions of Naira values against foreign currencies particularly, the US Dollar, GBP Sterling and the Euro. Februry 

At the commencement of the term of the current government in May 2023, the Central Bank of Nigeria (CBN) as a key part of the new government’s economic policy measures, annouced changes to the way the country’s foreign exchange market would work. Foreign currencies are to be bought and sold at rates determined by the market and not by the Central Bank. 

This signaled an intention of the government to allow market forces to determine the value of the Naira. The intentions were very well placed in view of the prevailing regime of multiple exchange rates in the previous government in 2015 – 2023.

Under the multiple exchange rate regime, foreign and domestic investor confidence had been eroded which induced foreign exchange rate volatility. In June 2023, the International Monetary Fund (IMF) repeatedly called on Nigeria to end its multiple rate regime. The huge gap between the official and unofficial rates caused severe shortages of foreign exchange by discouraging supply from official sources. 

This has had major inflationary implications on the Nigerian economy as well as severe adverse effects on Foreign Direct Investment (FDI) 

What is the genesis of the volatility and are there solutions in sight?

BACKGROUND

THE FOREIGN EXCHANGE MARKET 

This is not the first time Nigeria will be liberalising its foreign exchange market. The first was in 1986; further efforts followed in 1995, 1999 and 2016. All were marred by various impediments in implementation. 

In 2016, the float was half-hearted. The Governor of the CBN stated then that the government would retain the official rate for “critical transactions”. The intention also was for the CBN to intervene regularly according to the dynamics of the market as the market continued to evolve steadily and as more money was expected to come into the country.

The float became official in June 20, 2016, and the Naira, of course, tumbled to ₦280/$1 just 1 day later. The black market however responded more favourably, moving from ₦347/$1 to ₦337/$1. The CBN was optimistic that official and black markets would merge and the naira would settle around ₦250/$1.

In truth it was never really a float. The official window for “critical transactions” was never defined and the Naira did not rise and fall as it should in a free market.The 2016 naira float policy did not meet a ready and able market that Nigerians could leverage, and foreign exchange speculators took every opportunity to create bubbles in the market which eventually led to Naira rates dropping further.

By 2017, the Naira went up to ₦300/$1, and the black market did not merge with interbank rates as hoped. It reached an all-time low of ₦525/$1. 

From 2015 – 2023, multiple exchange rates signaled a dysfunctional economy. It eroded investor confidence and induced foreign exchange rate volatility. In June 2023, the International Monetary Fund (IMF) repeatedly called on Nigeria to end its multiple rate regime. The huge gap between the official and unofficial rates caused severe shortages of foreign exchange by discouraging supply through official channels and encouraging bad actors to exploit tand widen the gap between the exchange official and parallel rates  

FOREIGN DIRECT INVESTMENT (FDI)

The last two decades have seen a steady drop in FDI and this together with the foreign exchange volatility is attibutable to a variety of problems in the Nigerian business environment including certainy of regulation 

The United Nations Conference on Trade and Development (UNCTAD) cited as the base cause, the global economic recession which had exposed Nigeria to various macroeconomic instabilities as the cause of the dip in investment flow into the country. According to the National Bureau of Statistics (NBS), Nigeria had experienced a steady decline in FDI since 2008 when the world experienced an economic global meltdown. However, before the economic meltdown, the growth of foreign direct investment in the country has had a mix trend. In this regard, although both have witnessed a declining trend, one must identify a clear dichotomy between FDI in the oil sector and FDI in the non-oil sector with the former being more resilient than the latter due to the fact that earnings are in hard currency.

A survey report from the studies by the United Nations Conference on Trade and Development (UNCTAD) indicated that FDI inflows to Nigeria fell by 27 percent i.e. from $4.7bn recorded in 2014 to $3.4bn achieved in 2015.

From 2015-2023 and coupled with the effect of COVID, the level of non-oil FDI has dropped significantly and become a major concern with notable subsidiaries of multinationals such as Paterson Zochonics (PZ) Nigeria Plc (subsidiary of PZ Cussons Plc), a 124 year old Nigerian company and a major British manufacturer of personal healthcare products and consumer goods moving to delist its shares from the Nigerian stock exchange in 2023 due to foreign exchange challenges. Another notable example is Glaxo Smith Kline (GSK) Nigeria Plc (subsidiary of GSK a global pharmaceuticals company) deciding to cease doing business in Nigeria, 

CURRENT SITUATION

Due to the absence of local production and the recent liberalisation of commodity imports, the IMF in its “Post Financing Assessment and Staff Report” of Febraury 2024 has warned that Nigeria faces a risk of a 33% currency depreciation in 2024 which could lead to a massive surge in inflation, reaching a peak of 44% in 2024. 

The three key problems that afflict Nigeria’s foreign exchange market are the lack of transparency, foreign exchange shortages and volatility. 

Shortages occur mainly because about 90% of Nigeria’s foreign exchange earnings come from the oil sector and 60% of government revenue come from the oil sector. Since the sharp drop in oil prices in 2020 (and even though oil prices have become more robust since 2021 to date) the foreign exchange market has remained volatile with considerable increases in foreign exchange demand in a predominantly import based economy. 

To make matters worse, much of the foreign exchange from non-oil sources (such as diaspora remittances, tourism and export of non-oil products) is channelled through the black market and not through the banking system.

However there are two perspectives that must be taken in addressing the problem, the first is the long term perspective and the second is the short term perspective, both of which must immediately be embarked upon simultaneously.

LONG TERM PERSPECTIVE

The long term solutions to the foreign exchange problem remain heavy public and private sector investment in:

1. Addressing the infrastructure deficit Nigeria suffers such as the lack of stable and comprehensive electricity power in urban and rural areas; comprehensive and integrated road, rail water transportation for persons and goods; 
2. Health care
3. Educaition
4. Local raw materials development in the agro-allied industires and the oil, gas and solid minerals sectors
5. Import substitution by the development of local manufacturing based on local raw materials particularly for food production and the manufacture of and production of machinery, components and finished goods which are presently being imported

However, these are long term solutions, which require consistent planning and policy implementation by successive governments.

SHORT TERM PERSPECTIVE

The short term perspective is of immediate importance due to the highly inflationary impact the devaluation of the Naira is having on the Nigerian economy, The last seven months have seen extraordinary and unprecedented volatility with the exchange rates dropping weekly and even daily. 

The government has, in a bid to assuage public concerns sought to address the spikes in demand for foreign exchange by a basket of short term solutions.  

Amidst calls for the federal government to tighten up monetary policy by increasing interest rates thus curbing inflation, the government is currently in a bid to reduce the spikes in the demand for foreign exchange. In furtherance of this, the government is identifying potential problem areas in government activities as well as, intervening in the official foreign exchange market and in the parallel market. 

Problem Areas 

Addressing revenue leakages

The leakages from the oil sector stemming from a lack of tranparency in the governance of the sector have led to hard currency revenue leakages. This includes a lack of proper oversight of Nigerian share of crude oil allocations under contracting arrangements with the International Oil Companies, exposing such crude oil to unlawful third party actors and the syndicated theft of crude oil.

The activities of state governments after the disbursement of money by the Federation Account Allocation Committee (FAAC) have also come under scrutiy. Such actions have contributed to the depreciation of the naira, according to data and interviews with people familiar with the matter.

It has been discovered that portions of the funds from FAAC were often changed to dollars by some governments at the parallel market, putting more pressure on the naira.

An analysis shows that from July 2023 to January 2024, the Naira depreciated in six months immediately in the parallel market after the FAAC shared money to the federal, state and local governments.

With the removal by the Federal Goverenment of fuel subsidies, more volumes of naira are being shared by the federal, state and local governments and some of these monies are changed to dollars at the parallel market.

Interventions in the Official Market

In a series of guidelines recently, the CBN ordered Deposit Money Banks to sell their excess dollar stock and maintain certain level of prudential thresholds.

The new guidelines provide that the Nett Open Position (NOP) limit of the overall foreign currency assets and liabilities of banks shall not exceed “20% short or 0% long of shareholders’ funds”. The apex bank said the move was due to concerns over the growth in foreign currency exposures of banks through their NOPs.

Delaying Oil Company Remittances

In a move aimed at stabilising the naira, the Central Bank of Nigeria (CBN) has announced a new policy restricting international oil companies (IOCs) from repatriating 100 percent of their foreign exchange proceeds abroad immediately.

The policy, which takes effect immediately in February 2024, limits IOCs to repatriate only 50 percent of their proceeds immediately while the other 50 percent will be repatriated 90 days from the day of inflow.

Policing Foreign Exchange Racketeering

The federal government is also seeking to disrupt and prevent currency racketeering, foreign exchange rate manipulation, money laundering and the financing of terrorism by stopping the proliferation of unregulated transactions. 

As a number of transactions are being done through Bureaux De Change (BDC), the federal government has through the CBN unveiled a set of regulatory guidelines titled  “REVISED REGULATORY AND SUPERVISORY GUIDELINES FOR BUREAU DE CHANGE OPERATIONS IN NIGERIA”

1. BDCs shall be divided into two tiers, with different requirements for capital, presence, and locations.
2. BDCs shall have a minimum capital of N2 billion for Tier 1 and N500 million for Tier 2, and other fees and deposits to be specified later
3. Reporting requirments have been imposed on transactios over a minimum threshold of $ 10,000

The foregoing are included in a number of enumerated guidelines which are aimed at bringing BDCs under a similar supervisory and regulatory oversight as banks.

The CBN will expect these measures to have an immediate impact on the foreign exchange market. 

Our Corporate, Foreign Investment  and Capital Markets Department at F.O. Akinrele & Co. will contine to monitor these developments closely.

The Nigerian maritime sector has always represented a significant commercial engine of the Nigerian economy. Opportunities for Nigeria’s economic growth through linkages in global and inter-Africa supply chains through our maritime lanes remain robust and significant. 

The efficiency and adaptability of our maritime sector are thus critical and the Nigerian government has laid down a marker by prioritising the need to augment the nation’s GDP from the maritime sector.

For the first time, a Ministry of Marine and Blue Economy has been established to harness the nation’s ocean and coastal resources for economic growth. 

In line with these initiatives, the Nigerian Judiciary is also playing its role by updating the Admiralty Procedure Rules, to foster a fit-for-purpose dispute resolution mechanism for stakeholders in the sector and this is symbolised by the enactment of the Admiralty Jurisdiction Procedure Rules, 2023 (“the AJPR 2023“).

After consultation with maritime practitioners, the Admiralty Jurisdiction Procedure Rules of 2011 (“the AJPR 2011”) was repealed and replaced by the AJPR 2023 under the authority of the Honourable Chief Judge of the Federal High Court, Justice Terhiemba Tsoho, in exercise of his powers under Section 254 of the Constitution of the Federal Republic of Nigeria and Section 21 of the Admiralty Jurisdiction Act 1991 (AJA). 

The AJPR aims at augmenting the Admiralty Practice and Procedure at the Federal High Court, bringing it in line with global best practices and making Nigeria a regional dispute resolution hub for Africa.

Several changes have been made. The most notable are outlined below:

Notable New Provisions:

1. THE ESTABLISHMENT OF ADMIRALTY DIVISIONS AND THE DESIGNATION OF ADMIRALTY JUDGES: 

The Chief Judge has now mandated the establishment of Admiralty Divisions for the Court and designated Judges of the Federal High Court as Admiralty Judges. This is significant in ensuring that specialist Judges focus on maritime cases exclusively.

2. ESTABLISHMENT OF THE ADMIRALTY REGISTRY AND THE HEAD OF THE ADMIRALTY REGISTRY: 

The establishment of the Admiralty Registry of the Admiralty Division of the Court and the empowerment of the Admiralty Marshal (or his substitute) to head the Admiralty Registry of each Admiralty Division further reinforces the clear objective of promoting maritime specialisation.

3. VALIDITY OF WARRANT OF ARREST IRRESPECTIVE OF TRANSFER OF ACTION: 

The AJPR 2023, in preserving the position that an admiralty action in rem may be commenced in the Judicial Division of the Court in which the res may be found or is expected to arrive. have introduced two novel provisions:

1.  Where an admiralty action in rem is not commenced in a Judicial Division where the subject of the maritime (the “res”) is located or expected to arrive. provision is now made for the transfer of the warrant of arrest to the appropriate Judicial Division where the subject of the action is located or expected to arrive, and the warrant of arrest shall remain enforceable against the res in any Judicial Division in which the res may be located. 
2. Where a suit is commenced in any Judicial Division other than the Judicial Division where it ought to be commenced, the Rules provide that the suit may be heard and determined in that Judicial Division unless the Court directs otherwise. 

4. IDENTIFICATION OF PARTIES IN ACTION IN REM

The AJPR 2023 has abolished the previous requirement of specifying the “relevant person” as a defendant, in an action in rem in relation to a proprietary maritime claim. The only parties to be specified as the defendant in the Writ of Summons are the Ship or Other property. However, in an action in rem in relation to a general maritime claim, as in addition to specifying the ship or other property, a relevant person must be specified as a defendant.

This helps to clear up unneccsary technicalities that have developed in recent years, which have unfortunately impeded the progress of maritime actions.

5. RECOGNITION OF PHYSICAL AND DIGITAL SERVICE

The AJPR 2023, mandates that a Writ of Summons, a Court order of arrest, and a warrant of arrest in an action in rem, be served through physical service. 

Additionally, the Rules have now accomodated a digital approach allowing for other Court Processes in an action in rem to be served on the defendant through the defendant’s email address. 

Also, a legal practitioner in representing the defendant, can be properly served with such other Court Processes.

6. MEDIUM OF SERVICE WHERE VESSEL IS ABANDONED OR DEFENDANT’S WHEREABOUTS UNKNOWN

The AJPR 2023, provides that where an action in rem is commenced against the ship or other property which has been abandoned in Nigeria or in personam is filed against the defendant who does not reside in or carry on business in Nigeria through an agent, the Court may order service on such defendant or owner of ship or other property and such service shall be done at the last known address of the defendants business and which shall be delivered by Courier between Nigeria and in the Country of business. 

Alternatively, the service shall be by any mode as accepted by the Court.

7. ARRESTING A SHIP AND OTHER PROPERTY: 

DIGITILISATION

The AJPR 2023 introduces electronic filing (“e-filing) that has been in use in the judicial divisions of state high court and in major cities in country.

There are provisions for the physical filings (to be done at the Admiralty Registry) or e-filing (to be done at the Admiralty E-filing Unit) as regards, ex parte applications for a warrant arrest of a ship or other property. Such e-filed ex-parte applications must be in PDF (Portable Document Format) and shall be sent to the email address as shall be provided by the Admiralty Registry. E-filing, fees payable for the court processes shall be assessed and paid online.

EXPEDITIOUS – PHYSICAL & VIRTUAL HEARINGS

The AJPR 2023 mandates that where it is practicable, such application shall be heard and determined within  a twenty-four (24) hour timeline from the date of filing, and such proceedings may be conducted physically or virtually on any day, including Sundays and public holidays.

CAVEATS AGAINST ARREST

The AJPR 2023 now requires that before a warrant of arrest is issued, the applicant must apply for a search to be made in the caveat book to determine whether or not there is a caveat against the arrest of such ship or other property. 

Upon such application for search, the Admiralty Registry is to issue a report of the search and such report shall be in Form 8A (Report of Search of Caveat Against Arrest Register).

This is an improvement from the uncertain and controversial position under the AJPR 2011, where a prospective plaintiff  was required to file an affidavit stating whether or not there is a caveat against the arrest of such ship or other property. This position was susceptible to manipulation as in many cases, the Court may not be provided with the correct information. 

8. WARRANT OF ARREST FOR FOREIGN COURT PROCEEDINGS AND NIGERIAN OR INTERNATIONAL SEATED ARBITRATIONS

The AJPR 2023 introduces a simplified process of obtaining a warrant of arrest for ships or property in support of foreign court proceedings or arbitration proceedings within or outside Nigeria. The provision ensures efficiency by allowing the Applicant to file such an application without commencing a separate action. The Rules mandate that such an application will be accompanied by the certified true copy (CTC) of the Court or Arbitration Processes, and a duly notarised undertaking as to indemnity if later found that the order for arrest should not have been made.

CONCLUDING REMARKS

The AJPR 2023 establishes a new and progressive legal regime for Admiralty Proceedings in Nigeria. steering it into alignment with contemporary maritime realities. 

It is advised that all stakeholders in the maritime sector, including legal practitioners, shipping companies, and other relevant parties, familiarize themselves with the Rules to effectively navigate the intricacies of maritime legal proceedings.

The Electricity Act Amendment (EAA) bill, 2024, was signed into law on 9 February 2024. It seeks to reform the Nigerian electricity sector and addresses the challenges of power generation, transmission, distribution, and consumption. 

The EAA introduces several changes and innovations to the Electricity Regulation Act, 2006, which was the previous legal framework for the electricity sector. 

Key objectives of the EAA are:

1. Promoting the development and environmental protection of host communities of power generating companies (GENCOs) by setting aside 5% of their annual operating expenditures for infrastructure projects in the host communities.

• Establishing the Transmission System Operator SOC Ltd, a new entity that will be responsible for the operation, maintenance, and expansion of the national grid, as well as the coordination and dispatch of electricity from various sources.

• Creating an open market platform that will allow for competitive electricity trading among GENCOs, distribution companies (DISCOs), eligible customers, and other market participants.

• Assigning the duties, powers, and functions of the Transmission System Operator SOC Ltd to the National Transmission Company South Africa SOC Ltd, a joint venture between the Nigerian and South African governments, which will own and manage the transmission assets and infrastructure.

• Enhancing the regulatory and enforcement powers of the National Energy Regulator (NER), which will oversee and monitor the electricity sector and ensure compliance with the provisions of the Act.

Key Benefits of the EAA are:

1. Improving the quality and reliability of electricity supply and increasing the availability and diversity of power sources.

2. Fostering the development and welfare of host communities, as it will provide them with funds and opportunities for infrastructure projects, such as roads, schools, health centers, and water supply.

3. Stimulating the growth and competitiveness of the electricity market, as it will encourage more investment and innovation in the power sector and create more choices and options for consumers and producers of electricity.

4. Enhancing the transparency and accountability of the electricity sector, as it will ensure that the NER and other stakeholders adhere to the principles and standards of good governance, and that the electricity tariffs and prices reflect the true costs and benefits of electricity.

Key challenges and Risks to sector and economy at large are:

1. It may face legal and political opposition from some stakeholders, such as the existing GENCOs and DISCOs, who may perceive the bill as a threat to their interests and profits, and may challenge its constitutionality and validity in court.
2. It may encounter technical and operational difficulties, such as the lack of adequate infrastructure and capacity, the need for coordination and cooperation among various entities and agencies, and the possibility of cyberattacks and sabotage on the transmission system and the open market platform.
3. It may require significant financial and human resources, such as the funding and expertise needed to implement and sustain the reforms and innovations introduced by the Act, and the compensation and training needed for the affected workers and communities.

The implementation of the EAA will be monitored by industry operators and prospective investors. It is a positive step in the right direction and if properly implemented, will bring rapid development to the electricity sector.

In 2022, Mr. Anthony Nkadi, a longstanding partner in the Shipping and Transport Group was appointed Head of Regional Shipping and Transport Projects Group (RSTPG). 

This appointment combines his expertise as a seasoned maritime practitioner with his considerable aviation law experience, which have critically addressed the strategic needs, critical opportunities and challenges of the firm’s clients.

This appointment marks another milestone in his career, which has been defined by hard work, commitment and professionalism.