Port Charges and Manufacturing: A Looming Crisis Revisited
In Nigeria’s turbulent economic history, few policy decisions have sparked as much concern among manufacturers as sudden hikes in port charges. The Manufacturers Association of Nigeria (MAN) has repeatedly raised the alarm over policies that burden the real sector with additional costs, a scenario that played out in the past with dire consequences.
A look back at previous increments in port charges reveals a troubling pattern—each increase translated to higher production costs, a surge in inflation, and reduced industrial competitiveness. This time, the proposed 15% rise in port-related charges by the Nigerian Ports Authority (NPA) threatens to deepen an already fragile economic situation.
Segun Ajayi-Kadir, mni, Director General of MAN, echoes the concerns of manufacturers nationwide: “At a time when businesses are grappling with foreign exchange volatility, soaring energy costs, and supply chain disruptions, this increase will deal a severe blow to an already embattled manufacturing sector.”
The Port Gateway and the Real Sector’s Burden
Ports serve as the critical gateway for Nigeria’s trade, handling 80% of traded goods, according to the United Nations Conference on Trade and Development (UNCTAD). With Nigeria being a major hub for imports and exports in West and Central Africa, inefficiencies and high costs at the ports translate directly to increased production expenses.
For manufacturers relying on imported raw materials and machinery, port charges form a substantial component of operating costs. Any hike in tariffs will escalate production expenses, pushing inflation higher and eroding the competitiveness of locally produced goods. Worse still, many manufacturers operating within NPA facilities will bear the brunt of increased lease rates, further straining their ability to sustain production.
Lessons from the Past: Economic Realities and Global Competition
Nigeria’s manufacturing sector has long struggled with high operational costs, a deteriorating business environment, and declining industrial capacity utilization. The last time port charges were raised, businesses faced mass layoffs, plant shutdowns, and an exodus of investments to more business-friendly environments in neighboring countries.
Today, the same threat looms. Countries like Ghana and Togo, with more efficient and cost-effective ports, stand to benefit from cargo diversions. Nigerian manufacturers will not only struggle with higher costs but may also lose regional and international market share.
A Call for Pragmatism: Revenue Generation Without Industrial Strangulation
MAN acknowledges the need for increased revenue but insists that raising tariffs is the wrong approach. Instead, the NPA should focus on:
- Reducing port congestion by improving vessel turnaround times.
- Eliminating bureaucratic bottlenecks to lower demurrage charges.
- Investing in infrastructure to enhance port efficiency.
- Aligning port charges with global best practices to attract more trade.
Rather than imposing additional costs on manufacturers, a stakeholder-driven dialogue is needed to explore sustainable revenue solutions. The timing of this proposed increase contradicts the government’s push to make Nigeria a leading trade hub in West Africa.
Ajayi-Kadir warns: “A policy decision of this magnitude cannot be imposed without meaningful consultation. NPA’s approach of engaging stakeholders after the decision has been made is akin to putting the cart before the horse. We urge them to rescind this decision before it triggers an industrial downturn that the economy cannot afford.”
As 2025 approaches, the government’s commitment to stabilizing the economy will be tested. The manufacturing sector stands at a crossroads—either policymakers ease the burden on businesses, or they risk an economic contraction that will set Nigeria back in its quest for industrial growth. The choice is clear: rethink the hike or face a manufacturing crisis that will have far-reaching consequences.
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