The Manufacturers Association of Nigeria (MAN) has urged the federal government to improve port infrastructure which will enhance operational efficiency and attract more business for growth.
Director General of MAN, Segun Ajayi-Kadir, made the appeal following the recent 15 per cent increase in port-related charges by the Nigerian Ports Authority (NPA), which the association opposed, saying it will exacerbate the challenges faced by the real sector.
The association decried that 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, imposing additional financial burdens on manufacturers through increased port tariffs now is ill-timed and could signal a departure from government’s efforts and commitment to the ease of doing business.
Ajayi-Kadir therefore appealed to NPA to shelve the proposed 15% tariff increase and instead, collaborate with stakeholders to explore sustainable alternatives for revenue generation.
Ajayi-Kadir noted the real issues affecting port revenue included port congestion and inefficiency; High demurrage charges, Infrastructure investment among others.
He pleaded with the government to reduce the turnaround time for vessels and improve cargo clearing processes which can significantly boost revenue.
“Addressing bureaucratic bottlenecks that delay cargo clearance will ensure faster throughput and more efficient revenue collection.
Improving port infrastructure will enhance operational efficiency and attract more business, leading to natural revenue growth.”
He reeled out the consequences of hike in tariffs in the current economic climate to include higher prices of goods and fanning inflation; Reduced competitiveness of Nigerian manufacturers in local and international markets; Increased smuggling due to high costs at Nigerian ports compared to neighbouring countries; Decline in government revenue due to lower cargo turn out and manufacturing downturn among other dire consequences..
“Rather than imposing additional financial burdens on businesses, we propose a stakeholder 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 in order to avert a monumental downturn in the fortunes of businesses in Nigeria. The manufacturing sector can ill-afford such an increase at this time; it 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 government to stabilize the economy in the year 2025.”
The MAN boss pointed out that ports are the gateway to international trade and play a crucial role in the efficiency and cost-effectiveness of business operations.
Citing the United Nations Conference on Trade and Development (UNCTAD) which reported that 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, Ajayi-Kadir said this underscores the critical role Nigerian ports play in facilitating trade and industrial productivity.
He emphasized that 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 escalated costs, which could significantly disrupt the slight moderation in the mounting challenges that has bedeviled the manufacturing sector in recent times.
“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.”
While acknowledging the need for revenue generation, Ajayi-Kadir viewed that increasing port tariffs could be counterproductive in the long run.