Manufacturers Association of Nigeria (MAN) has warned that the recently proposed 15 percent increase in port charges by Nigerian Ports Authority (NPA) will spark a further rise in production costs and worsen the rate of inflation in the nation.
The manufacturers made this appeal in a statement signed by its Director General, Mr. Segun Ajayi-Kadir mni, disseminated on Sunday, even as the association advised NPA to rescind its decision.
“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,” the association asserted.
Noting that Nigeria’s current economic climate is characterized by rising inflation, foreign exchange challenges, and declining industrial capacity utilization, Manufacturers stressed that many businesses are experiencing worrying downturn due to unsustainable operating costs.
“Increasing port tariffs is therefore ill-timed and could signal a departure from government’s avowed efforts and commitment to the ease of doing business. It is inevitable that this additional strain on industrial activities will ultimately lead to reduce capacity utilization and possibly job losses,” it said.
According to manufacturers, the proposed 15 percent increment will also negate the nation’s plan to be competitive in regional trade as neighboring countries with more efficient and cost-effective ports will become far more attractive alternatives, leading to increased cargo diversion.
It warned that this increment will not only reduce revenue for the Nigerian government in the long run, but will also encourage smuggling and other untoward trade practices that weaken the nation’s economy.
While acknowledging the need for revenue generation, it maintained that increasing port tariffs could be counterproductive and admonished the Port Authority to address the real issues affecting port revenue including: port congestion and inefficiency, high demurrage charges, decaying port infrastructure, among other factors that make the the nation’s ports unattractive.
Manufacturers, however, posited that the development 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.
“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,” it argued.
