Nigeria’s $200b revenue target from non-oil exports elusive amid high shipping cost, logistic hurdles

Logistics challenges, policy inconsistency and rising production costs have plummeted the fortunes of Agrobusiness in Nigeria, but the high cost of shipping at the Nigerian ports worsened by the recent 15 per cent increase in tariff by the Nigerian Ports Authority (NPA). Stakeholders in the sector say the high cost suffocates export trade, deepens losses for smallholder farmers and renders Nigerian produce even less competitive in the global market. MOYOSORE SALAMI writes.

Nigeria’s agricultural sector is considered a key driver for economic diversification. Little wonder, efforts have been channelled at growing non-oil exports and thereby, boosting foreign exchange earnings. However, policy somersault and bottlenecks in the country’s maritime sector have undermined its potential and overall contribution to national development.

It has been a worrisome phenomenon that the prices of some locally produced agro products are far higher than their foreign counterparts, but several factors such as policy summersaults, poor infrastructure, rising inflation, foreign exchange and indeed high cost of shipping at the seaports among others, are making the products uncompetitive. Facts revealed that the cost of exporting a container from Nigeria is about $1,500 which is twice the $600 charged in the neighbouring country- Ghana.

As if the charges were not high enough, the NPA has recently introduced a 15 per cent increment in terminal charges and service rates by port service providers across the country effective May 1, 2025.

The Guardian gathered that this hike has been described as a major blow to agricultural exporters already navigating a hostile business terrain. The Federal Government has set a target of increasing its non-oil revenues to as much as $200 billion in the next five years to meet its foreign exchange demands, but stakeholders believed that this ambition might remain a tall order, after all, if urgent actions are not taken to tackle the inherent challenges.

Lamenting the increase amid forex instability, rising inflation and inefficient infrastructure, some of these exporters and industry stakeholders said, “these exorbitant charges, inefficient clearance processes and dilapidated infrastructure might push several small and mid-sized agro exporters out of business and force cargo traffic to neighbouring countries.”

The Nigerian Export Promotion Council (NEPC) said the average cargo dwell time in Nigeria is between 20 to 30 days compared to just four to seven days in neighbouring ports.

According to NEPC, inefficiencies in logistics and supply chains cost Nigeria over $10 billion yearly. However, aside from the dwell time, the council mentioned excessive documentation, overlapping agency inspections and constant system downtimes as reasons for the delays.

Losses Piling Up, Opportunities Slipping Away
The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) estimated the delays and rerouted shipments and all other bottlenecks in 2023 to be $400 million in potential agribusiness revenue.

Irked by the unpalatable situation, the CEO of Produce Export Development Alliance, Aiyeoola Adetiloye, said the added costs and delays threaten the viability of Nigeria’s agricultural exports, including key commodities like cocoa, sesame, and cashew.

Adetiloye, who witnessed the impact of these delays at export warehouses across Nigeria, stressed that the situation is economically devastating.
“I have stood in export warehouses in multiple states and watched thousands of tons of produce meticulously sorted by women, waiting for clearance at the ports for days, sometimes even weeks. These delays are not just frustrating; but economically devastating,” he stated.

He said the port charge increase is already affecting the export of agricultural commodities and the agricultural export sector, where narrow profit margins, driven by rising input costs and inflation, leave little room for additional financial burden.

“When charges increase, transportation becomes more expensive, clearing will take longer, and businesses, exporters that form the backbone of the export chain, bear the brunt through reduced transactions,” he said.

Adetiloye pointed out that about 50 to 60 per cent of delays at the ports are due to policy bottlenecks and inadequate infrastructure, rather than issues related to customs or security. He added that the increase in port charges has had a direct impact on the cost of clearing goods, which now amounts to 20 per cent or 25 per cent of the total export cost, an unsustainable figure for many agribusinesses.

Produce Export Development Alliance boss said as a result, some exporters are consolidating shipments in an attempt to offset the rising costs through bulk volumes. However, this move is expected to lead to delays in smaller shipments, creating an undersupply in international markets.

He said other exporters are exploring alternative routes, rerouting their goods to neighbouring countries like Benin and Ghana to avoid the country’s high port charge, which could weaken the country’s position in the global export market.

Despite these challenges, he noted that some exporters are adopting innovative solutions, such as investing in shared logistics infrastructure and exploring inland dry ports like those in Kaduna and Ibadan. He also applauded the growing interest in using digital platforms to streamline transactions and improve coordination within the export value chain.

However, Adetiloye stressed that the real question Nigeria needs to address is the long-term impact of the port charges on the nation’s export ambition.
“Nigeria is aiming to generate $200 billion from non-oil exports over the next decade, but that vision is at risk if our ports continue to leak revenue due to inefficiencies and regulatory hurdles,” he warned.

He advocated for a performance-based tariff system, where exporters who meet specific quality standards or utilise advanced systems such as cold storage could be eligible for rebates or partial waivers. He also called for the automation of port processes, which would reduce physical interactions, cut corruption, and save both time and money.

“If the current inefficiencies and rising charges persist, we are not just looking at fewer containers leaving the ports; we are looking at thousands of people in the export value chain losing access to global markets, Nigeria losing its foothold in the global supply chain, and ultimately, a broken trust in our national system.”

He highlighted the implications of the situation, noting that the challenges facing the export sector go beyond financial losses. “It’s not just about revenues; it’s about food security, national reputation, and the dignity of the millions of farmers and agripreneurs who work tirelessly to make Nigeria’s agricultural potential a reality. Now is the time to fix our ports,” he urged.

Cocoa Farmers Alliance Association of Africa (COFAAA) boss, Adeola Adegoke, described the recent port charge hike as a major setback for cocoa traders and a threat to the fragile prosperity currently enjoyed by Nigerian farmers.

Adegoke said the increase comes at a time when international cocoa prices are climbing, creating opportunities for farmers; the industry is being exposed to new risks.

“When you look at the price of cocoa on the international market, alongside the financial challenges within the industry, it becomes clear that the financial volume required to participate in export has significantly increased, this is creating serious constraints. Whether you are exporting 10,000 or 20,000 tons, the capital you need now is much higher.”

He explained that the new port charge further raises the barrier to entry for exporters. “Let me say you need N5 billion before, now you’re talking about N15 billion. The 15 per cent charge only adds to the heavy financial burden. It creates difficult transition conditions that lead to deeper financial stress; the impact on us is bad. We are not even making money, and now this is going to increase the financial challenges even more.”

Adegoke argued that while the global cocoa market is becoming more favourable, the benefits are not reaching the grassroots producers owing to systemic challenges. “The farmers have suffered so much, and this prosperity we are seeing in international prices is being eroded by policy decisions that don’t take the local realities into account. It’s weakening the chance for us to grow.”

He warned that poor farmers, especially in rural and low-income areas, risk being cut off from any benefits. “Millions of people in farming communities will not be able to realise the income from the current market boom because of these policies and cost barriers. The government must realise that there are other sectors where percentage increases can be considered, but not here, when it’s affecting a vital industry.”

Adegoke said the port-related costs is “a bad risk to competitiveness,” adding that cocoa farmers cannot dictate international prices. “The prices are determined externally. That’s why government policy must be intentional, supportive, and pro-growth. We are not just talking about doing business we are talking about enhancing the capacity of producers and ensuring they can operate profitably.”

He highlighted cocoa’s contribution to the country’s foreign exchange earnings and job creation. “Statistically, Nigeria has benefitted greatly from cocoa in terms of GDP contribution, foreign exchange, and employment opportunities for rural communities. It has always been good for the economy,” he said.

According to him, the importance of diversifying support toward sectors like agriculture is vital. “We have been talking about diversifying away from oil. Agriculture, particularly cocoa, offers that opportunity, but the government must put in place the right framework and policies.”

He also criticised the low level of local processing, which he said stands at about 10 percent, calling it a lost opportunity for value addition and revenue. “We need to increase local processing and exports. That’s how farmers, investors, processors, exporters can make more money.”

Adegoke also noted the high cost of borrowing and export operations. “Commercial banks are demanding heavy collateral, and now the financial requirements have doubled. You could need N50 million just to buy a ton. Then you face the cost of export maybe N30,000 or N200,000 per shipment depending on the volume. And all of this is before you even make a profit.”

He called for equity and sustainability in policymaking. “Every business should make a profit. It shouldn’t all come at the expense of producers. Farmers should not be the ones to shoulder the risks while others enjoy the rewards. What we need is a policy environment that allows the prosperity now emerging in the cocoa sector to reach those at the foundation of the value chain.”

The co-founder of Agrolinking, Joseph Fashola, warned that the practice is severely undermining Nigeria’s agribusiness sector and jeopardising national revenue diversification efforts.

Fashola attributed the trend of rerouting exports particularly agricultural goods like cocoa, sesame, and cashew through countries such as Benin, Togo, Niger, and Ghana, to long-standing inefficiencies at Nigerian ports.

“The practice of Nigerian exporters rerouting goods through neighbouring countries did not just start today, and it has had profound economic implications, particularly for the agribusiness sector. This trend is largely driven by inefficiencies, high costs, and delays at Nigerian ports and its consequences ripple across revenue, costs, competitiveness, and employment.”

Fashola explained that by avoiding Nigerian ports like Lagos and Port Harcourt, exporters deprive the country of substantial revenue. While the NPA reported ₦758 billion in earnings in 2024, up to 30 percent of Nigeria-bound cargo is estimated to be rerouted, costing the government tens of billions of naira annually in port fees, import duties, and VAT.

“This weakens the government’s ability to reinvest in essential agricultural infrastructure such as storage facilities and rural roads,” he said. Rerouting, he added, imposes steep costs on exporters. Goods must first be shipped to foreign ports and then brought overland into Nigeria or to final markets, often by truck. “This adds 20 to 30 per cent to logistics costs owing to fuel, cross-border fees, and extra handling. For perishables, the extended transit raises the risk of spoilage, sometimes wiping out 30 per cent of shipment value.”

He noted that these increased costs would reduce profit margins and global competitiveness for Nigerian agribusinesses. Fashola also emphasised how the trend worsens the country’s foreign exchange (forex) crisis. “Payments to foreign ports and logistics operators drain Nigeria’s forex reserves, reducing the capital available to import essential agricultural inputs like fertilisers and machinery; this limits productivity and hampers national export expansion.”

With Nigeria’s 2020 total trade value estimated at N32 trillion, he warned that if just 10 percent of that volume is rerouted, it could translate into more than N3 trillion in annual direct and indirect losses, a severe blow to an agribusiness sector critical to the country’s non-oil revenue aspirations.

According to him, despite being central to Nigeria’s non-oil diversification strategy, agriculture faces major setbacks owing to dysfunctional ports. Exporting a container from Nigeria costs about $1,500 over twice the $600 charged in Ghana.

“This disparity makes Nigerian goods uncompetitive. A sesame exporter facing $900 in extra costs per container could easily lose out to competitors in Togo or Benin. Clearing goods at Nigerian ports takes an average of 7 to 10 days, compared to 2 to 3 days in more efficient systems. For time-sensitive produce like tomatoes and mangoes, this delay leads to spoilage, shrinking export revenue and discouraging farmers from expanding production,” he explained.

Fashola was critical of what he described as largely rhetorical government reforms in the port and export sectors. “Yes, government reforms have been more rhetorical than practical. Policies are often announced with fanfare but implementation remains weak. For instance, despite the Nigerian Port Process Manual and efforts by NIMASA to improve efficiency, delays and corruption persist.”

According to him, the 2024 Seatrade Maritime report revealed that corruption adds an average of $182,300 to each shipment. “That’s a huge burden on exporters, especially in agriculture, where profit margins are already tight,” he said.

Fashola noted that ports such as Lagos operate beyond capacity with outdated equipment and poor access roads. Regulatory overlaps among agencies like Customs, Immigration, and Port Health further compound delays.

“Nigeria ranks 179th out of 190 in the ‘Trading Across Borders’ category on the Ease of Doing Business Index. That tells you everything,” he said.He identified a fully functional, automated Single Window System as the most impactful step the government could take.

“A single window integrates Customs, documentation, and payments on one platform, reducing clearance times from 7–10 days to less than 24 hours. Countries like Singapore already do this. For Nigeria, this would slash trade costs and minimise spoilage,” he said.

According to World Bank estimates, automation could cut trade costs by 25 per cent, saving exporters hundreds of dollars per shipment and boosting trade volumes by up to 20 per cent.

For this to work, he said the NPA must invest in IT infrastructure, online payment systems, and real-time cargo tracking, while also training officials and exporters through platforms like the e-learning portal launched by the Maritime Anti-Corruption Network.

“Done right, this reform could unlock billions of dollars in additional export revenue yearly, with agriculture leading the way as Nigeria’s strongest non-oil growth engine.”

On his part, the Lagos Chamber of Commerce and Industry (LCCI) President, Gabriel Idahosa, warned that the rising costs and poor regulatory practices are stifling trade, discouraging investment and threatening the survival of small and medium enterprises (SMEs).

Idahosa urged the government at all levels to foster a more predictable and investment friendly policy environment across sectors, particularly in maritime trade and port infrastructure. He emphasised that the compounded effects of high port levies, inefficiencies in cargo handling and arbitrary dollar-based charges heightened the cost of doing business with ripple effects on prices, job losses and competitiveness.

“In the last quarter, stakeholders faced two significant cost burdens: a 4 per cent levy introduced by Nigerian Customs and the hike in service charges by the Nigerian Ports Authority. While the customs levy has been suspended, the NPA’s increase remains in place, these actions have triggered a ripple effect from terminal operators to shipping companies and other service providers who have adjusted their prices upwards, compounding the financial strain on importers, exporters, and the broader business community which have all passed to us as consumers.”

He also pointed to irregularities in the call-off system, alleging that job prioritisation based on payment scale has increased transaction costs and fostered unfair practices within the port system.

“The recent 15 per cent tariff increase by the NPA, implemented without a phased strategy, is already worsening the financial burden on importers, we demand a more structured rollout and a full audit of tariff components, especially those charged in U.S. dollars, which increase foreign exposure for local businesses.”

He reiterated the Chamber’s stance against dollar-based charges by government agencies, emphasising that services rendered in Nigeria should be billed in Naira, not foreign currency.

“Since the currency of this country is Naira, the business community has been suspended on a small basis for individuals and some in-government agencies charging U.S. dollars for services rendered in Nigeria.”

Calling for systemic reforms, Idahosa highlighted the urgent need to deploy more cargo scanners at the ports to reduce delays and corruption. “This should be maintained, managed by terminal operators, and integrated into their processes. The strategy will significantly reduce cargo dwell time, lower demurrage, and enhance the vessel turnaround. This is the main reason ports in our neighboring countries are more efficient than Nigerian ports.”

He added that 100 per cent container scanning with minimal human interference as practiced in advanced ports globally, would not only improve cargo control but reduce corruption and limit the excessive presence of multiple government agencies at ports.

“We strongly advocate for the expedited implementation of the National Single Window Project, which, if executed effectively, promises to streamline port operations, enhance revenue collection, and facilitate the ease of doing business in the maritime space.”

Idahosa also called for continued government support to terminal operators in order to attract foreign direct investment (FDI) for critical infrastructure upgrades, citing the Lekki Deep Seaport as a step in the right direction.

“Efforts to enhance regional connectivity to the ports need to be significantly expedited as this will reduce over-reliance on road haulage, lower logistic costs, and improve cargo efficiency.”He further urged regulatory agencies to separate their core regulatory responsibilities from revenue collection mandates, warning that overburdening them with revenue targets undermines their effectiveness and hurts the business environment.

“An overly aggressive revenue-driven posture in regulatory agencies is detrimental to stakeholders, especially SMEs, importers, and exporters, often pushing businesses to the brink of closure.”

Beyond port issues, Idahosa also raised broader concerns affecting SMEs, including insecurity, unreliable electricity, and unresolved metering challenges. He noted that many small businesses are shutting down or reducing staff due to operational uncertainties and rising energy costs.

“Small businesses continue to grapple with loss of life, compounded with unpredictability and continuously rising tariffs, especially electricity tariffs, so many SMEs have shut down or refused their staff trains, with rising materials and energy costs compounding the lack of businesses on bio.” He urged the government to immediately intervene on issues around metering and establish a stable, predictable tariff management system to keep SMEs afloat and protect the larger economy.

Meanwhile, the NPA said the 15 per cent upward increase in tariff was premised on the urgent need to address the undesirable reality of aged and weak Infrastructure, obsolete equipment and slow Port capacity expansion which has continued to diminish the performance and indeed competitiveness of Nigerian Ports.

NPA spokesperson, Ikechukwu Onyemekara, in a document made available to The Guardian, said the Authority was compelled by the exigency of bringing Nigerian Ports up to speed with those of its peers in terms of infrastructure and equipment. He stated that NPA’s tariff was last reviewed in the year 1993.

NPA stated: “Globally, port authorities depend on revenue from operations to stay alive to their responsibilities which includes construction and maintenance of Port infrastructure, dredging of channels, provision of aids for safe navigation, provision of modern marine crafts for efficient harbour services, automation and digitization of port transactions, port security, energy efficiency and training and retraining of its employees.

“The global index of port rating and competitiveness which the international trade community relies on for its choice of countries to do business with, derives its data from how well the aforementioned responsibilities are addressed.

“Coming at this period of global economic upheaval and scramble for markets, this belated tariff review borne out of necessity constitutes a critical success factor in Nigeria’s quest to win back cargo handling business and its accompanying benefits including job opportunities it had lost to its maritime neighbours.”

“Contrary to the popular but erroneous notion that attributes high port costs to NPA relative to its peers, verifiable data shows that NPA tariffs are amongst the lowest in the region.

“The high incidence of unreceipted costs due to unduly high human interface, bureaucratic bottlenecks, functional overlaps resulting from absence of a Port Community System (PCS) and its corollary the National Single Window (NSW) are responsible for this contrived falsehood.

“Although long overdue, a quick win benefits of the NPA Tariff review for stakeholders, is the immediate boost it gives to the Authority to fast track the commencement of actual works on its concluded Port reconstruction and modernization plans.

“Secondly, the tariff review provides the necessary guarantees to fund the acquisition and urgent deployment of the Information Communications Technology (ICT) backbone of the PCS which is the precursor to the implementation of the NSW.

“Furthermore, the increased revenue generation arising from the review buoys the Authority’s capacity for critical maintenance works to open up the Eastern Ports for increased vessel and cargo traffic such as the reconstruction of collapsed Escravos Breakwaters and challenged aspects of Rivers, Onne and Calabar Ports respectively,” NPA stated.

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