The Manufacturers Association of Nigeria (MAN) is imploring the Nigerian Ports Authority (NPA) to shelve the proposed 15% tariff increase and instead collaborate with stakeholders to explore sustainable alternatives for revenue generation.
Speaking through its Director-General, Segun Ajayi-Kadir, MAN, said ” While we acknowledge the need for revenue generation, increasing port tariffs in the current economic climate will have dire consequences, including:
1. Increased cost of production, leading to higher prices of goods and fanning inflation.
2. Reduced competitiveness of Nigerian manufacturers in local and international markets.
3. Increased smuggling due to high costs at Nigerian ports compared to neighboring countries.
4. Decline in government revenue due to lower cargo turnout and manufacturing downturn.
Ajayi-Kadir: ” Rather than imposing additional financial burdens on businesses, we propose a dialogue to explore strategies for enhancing port efficiency, reducing operational bottlenecks, and creating a more business-friendly environment that will ultimately lead to increased revenue without undermining industrial growth and competitiveness.
” We earnestly advocate for caution and deep reflection on the part of the NPA, as a key stakeholder in Nigeria’s economic development.
NPA’s consultation with key economic actors after it has decided on the increase is tantamount to putting the cart before the horse and does not demonstrate goodwill.
We call on NPA to rescind the planned increase to avert a monumental downturn in the fortunes of businesses in Nigeria,” he said.
He further emphasized that the manufacturing sector can ill-afford such an increase at this time.
” The tariff increase runs against the present administration’s efforts at making Nigeria a trading hub in the West African sub-region and would definitely constitute a drag in the efforts of the government to stabilize the economy in the year 2025.”
In the position statement, Ajayi-Kadir maintained that the increase is coming up at a time when businesses are struggling with the rising cost of operations, high rate of foreign exchange, astronomical energy costs, and general economic uncertainties The association noted that imposing additional financial burdens on manufacturers through increased port tariffs will exacerbate the challenges faced by the real sector.
Port Operations and Their Impact on Manufacturing
Ports are the gateway to international trade and play a crucial role in the efficiency and cost-effectiveness of business operations.
According to the United Nations Conference on Trade and Development (UNCTAD), 80% of Nigeria’s traded goods are transported by sea, with 70% of total imports and exports in West and Central Africa destined for Nigeria.
This underscores the critical role Nigerian ports play in facilitating trade and industrial productivity.
For manufacturers, port-related charges constitute significant indirect costs, as most raw materials and industrial machinery are imported through these ports. Any increase in charges will have a ripple effect, leading to higher production costs, increased inflationary pressures, and reduced competitiveness of locally manufactured goods.
Many manufacturers who operate as tenants in NPA facilities will also face escalating costs, which could significantly disrupt the slight moderation in the mounting challenges that have bedeviled the manufacturing sector in recent times.