The Manufacturers Association of Nigeria, MAN, has expressed concerns over the proposed 15 per cent increase in port-related charges by the Nigerian Ports Authority, NPA.
The Director General of MAN, Mr Segun Ajayi-Kadir, in a statement on Sunday in Lagos, noted that the manufacturing sector was already beguiled by many challenges.
The News Agency of Nigeria recalls that the NPA on Thursday, disclosed its decision to begin review of its tariff across rates and dues to ensure it met current demands in port operations.
The authority cited infrastructural development and all-round competitiveness as reasons for the review which was its first since 1993
However, the MAN director general stated that the timing was inimical, particularly as businesses struggled with the rising cost of operations, high rate of foreign exchange among general economic uncertainties.
Ajayi-Kadir added that Nigeria’s current economic climate is characterised by rising inflation, foreign exchange challenges, and declining industrial capacity utilisation.
He noted that ports as the gateway to international trade, played a crucial role in the efficiency and cost-effectiveness of business operations.
“According to the United Nations Conference on Trade and Development, 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.
“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.”
The MAN director general stated that many businesses are experiencing worrying downturn due to unsustainable operating costs.
He said that increasing port tariffs was ill-timed and could signal a departure from government’s avowed efforts and commitment to the ease of doing business.
According to him, it is inevitable that this additional strain on industrial activities will ultimately lead to reduce capacity utilisation and possibly job losses.
“Furthermore, Nigeria must remain competitive in regional trade.
“Neighbouring countries with more efficient and cost-effective ports will become far more attractive alternatives, leading to increased cargo diversion.
“This will not only reduce revenue for the Nigerian government but will encourage smuggling and other untoward trade practices that weaken our economy,” he said.
Ajayi-Kadir said that alternative approaches to port revenue generation such as reducing turnaround time for vessels, improving cargo clearing processes, tackling bottlenecks and infrastructural development were critical.
“While we acknowledge the need for revenue generation, increasing port tariffs can be counterproductive in the long run.
“MAN implores the NPA to shelve the proposed 15 per cent tariff increase and instead, collaborate with stakeholders to explore sustainable alternatives for revenue generation,” he stated.
