The Manufacturers Association of Nigeria (MAN) has criticized the Nigerian Ports Authority’s (NPA) proposed 15 percent increase in tariffs.
On February 6, the NPA announced it had secured approval for a 15 percent tariff increase to improve infrastructure and upgrade equipment. This is the first tariff hike since 1993.
In a statement on Sunday, Segun Ajayi-Kadir, MAN’s director-general, pointed out that the manufacturing sector is already burdened with numerous challenges.
Ajayi-Kadir described the timing of the increase as detrimental, emphasizing that businesses are struggling with rising operational costs, a high rate of foreign exchange (FX), and other economic uncertainties.
He also noted that Nigeria’s current economic situation is marked by rising inflation, FX challenges, and declining industrial capacity utilization.
Ajayi-Kadir stressed that ports, as gateways to international trade, 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 percent of Nigeria’s traded goods are transported by sea, with 70 percent of total imports and exports in West and Central Africa destined for Nigeria,” he said.
“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.”
Ajayi-Kadir further stated that many businesses are experiencing a downturn due to unsustainable operating costs.
He argued that the increase is poorly timed and could signal a departure from the government’s stated commitment to improving the ease of doing business.
‘UPWARD REVIEW WILL LEAD TO JOB LOSSES, LOW ACTIVITIES’
Ajayi-Kadir warned that the additional strain on industrial activities will likely result in reduced capacity utilization and potential job losses.
“Furthermore, Nigeria must remain competitive in regional trade,” he added.
“Neighboring 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.”
Ajayi-Kadir suggested alternative methods for increasing port revenue, such as reducing turnaround time for vessels, improving cargo clearing processes, addressing bottlenecks, and focusing on infrastructural development.
“While we acknowledge the need for revenue generation, increasing port tariffs can be counterproductive in the long run,” he said.
The MAN DG called on the NPA to put the proposed 15 percent tariff increase on hold and collaborate with stakeholders to explore long-term revenue generation options.
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