Victor EzejaThe Manufacturers Association of Nigeria (MAN) has bemoaned the proposed 15 percent increase in tariff by the Nigerian Ports Authority (NPA).
The NPA announced on 6 February that it has obtained authorisation to raise its charges by 15% in order to improve equipment and infrastructure.
Join our WhatsApp ChannelThe Director-General of MAN, Segun Ajayi-Kadir, stated in a statement on Sunday that the manufacturing industry is already subject to several challenges.
Ajayi-Kadir said the timing of the tariff hike is wrong, emphasising that companies are already having difficulty keeping up with the high cost of operations, high foreign exchange rate, and other general economic challenges.
The MAN DG noted that decreased industrial capacity utilisation, rising inflation, and foreign exchange difficulties are the hallmarks of Nigeria’s current economic environment.
He argued that because ports serve as the entry point to global trade, they are essential to the effectiveness and economy of corporate operations.
Buttressing his point on the critical role of Nigeria’s ports, Ajayi-Kadir cited a United Nations Conference on Trade and Development (UNCTAD) report which said that 80 per cent of Nigeria’s traded goods are transported by sea, with 70 per cent 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,” he emphasised.
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“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.”
He lamented that many businesses are facing downturn due to unsustainable operating expenditures they incur.
According to him, the hike is ill-timed and may represent a shift from the government’s declared aim to making doing business easier.
He warned that the extra pressure on industries will inevitably result in lower capacity utilisation and even job losses.
He said: “Neighbouring countries with more efficient and cost-effective ports will become far more attractive alternatives, leading to increased cargo diversion.”
This, he added, “will not only reduce revenue for the Nigerian government but will encourage smuggling and other untoward trade practices that weaken our economy.”
He suggested alternative strategies for generating port revenue such as cutting down on vessel turnaround times, enhancing cargo clearing procedures, addressing bottlenecks, and developing infrastructure.
“While we acknowledge the need for revenue generation, increasing port tariffs can be counterproductive in the long run,” he said.
He urged the NPA to halt the planned 15 percent tariff hike and consult with stakeholders to arrive at a long-term revenue generation options.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
