Nigerias transport and storage industry shrank for the second time in the third quarter of 2023, entering a recession for the first time in 30 months, largely on the back of petrol subsidy removal, according to a published analysis.
The latest Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS) showed that the sector in real terms contracted by 35.9% in Q3, when compared to a negative growth of 50.6% in the previous quarter.
A breakdown of the NBS report revealed that four of the six sub-activities under the transport and storage industry recorded positive growth. The four sub-sectors are rail transport and pipelines, water transport, air transport and transport services.
Road transport, a major contributor to the industry, is also in recession as the sub-sector contracted by 43.65 percent in Q3 from a negative growth of 55.1 percent in the previous quarter.
Chief Executive Officer of Centre for the Promotion of Private Enterprise, Muda Yusuf, said, The biggest contributor to the decline in road transport is the subsidy removal. The state of the roads is also contributing to it; because, when you look at the roads in many parts of the country, they are in a bad shape.
With higher transportation fares, many Nigerians are forced to allocate a substantial portion of their salaries to cover commuting expenses, leaving little for other essential needs like food and rent.
Data from the NBS shows that the average retail price paid by consumers for petrol in May was N238.1, an increase of 162.9 percent in September (N626.2). The average retail price of diesel also rose from N844.28 per litre to N890.8 in September.
The increase in the cost of petrol led to the average fare paid by commuters for bus journeys within the city per drop to rise by 105.9 percent, to N1, 337.8 in September. In August, the high cost of the fuel forced many workers to drive less to work, while others changed their cars.
Many Lagos roads, which used to be notorious for traffic congestion, are now devoid of gridlock, except for areas and roads that are full of potholes, which slows down the movement of motorists.
Chief Operating Officer of Cars45 and Jiji, Maxim Makarchuk, said, Nigerians are now more interested in buying cars with good fuel consumption, or which have fuel efficiency due to the high pump prices of fuel. Buyers are now cautious in buying cars, and they tend to make very thoughtful decisions.
