Economic Contributions of Ports to a Nation
Ports serve as a major contributor to the economic and social development of a country. Trade between countries have significant contributions to the economic growth of a country. The success of Singapore is attributed to the Port of Singapore which has developed a transport logistic centre and has successfully been able to attract foreign investment.
Starting from the basis; what exactly is a port? A port is a maritime facility which may comprise one or more wharves where ships may dock to load and discharge passengers and cargo.
Ports are a major means of carrying out international trade. Majority of industries in the world are located in the coastal belt. Ports constitute an important economic activity in those coastal areas. It is important for developing countries to continuously improve the quality of port infrastructure as it contributes to higher economic growth, better logistics performance, higher seaborne trade, amongst other beneficial contributions to the growth of the economy.
Here are a few ways in which ports are beneficial to a country:
- Generation of revenue: Gains from trade can be categorised by expanded production and economic restructuring, leading to total factor productivity and GDP growth. An increase in port throughput can increase the region’s economy and a shortage in port throughput can affect the economy. Good seaborne trade helps boost the economy and increases the importance of seaports in the global supply chain. In 2019, the Nigeria Customs Service (NCS) generated N1.3trillion[1]; this is about 1% of Nigeria’s 2019 nominal GDP of N134.9 trillion. A substantial amount of this revenue can be attributed to the revenue generated from Nigeria’s ports. Tincan Island Port, one of Nigeria’s largest ports generated N346.50 billion in 2019[2].
Ports attracts Foreign Direct Investment (FDI) into a country. The Nigerian Ports Authority (NPA), on behalf of the government, has led a process of port privatization and concessioning to attract FDI into the country. - Improved Logistics Solutions: Logistics performance and seaborne trade stimulate economic growth. Today, over 80% of all trade is seaborne. Seaway transportation is the cheapest mode of transportation in carrying goods. A large percentage of essential and non-essentials gets to consumers from manufacturers via seaborne. The provision of logistics services has become a major aspect of various businesses. Poor logistics facilitation can reduce a company’s or country’s competitive advantage. Most aspects of logistics performance are logistics costs and reliability of supply chains.
- Creation of Employment: Gains from trade can be characterised by improved labour supply. The establishment of seaports can create a large number of employment opportunities.
[1] https://nairametrics.com/2020/01/10/nigerian-customs-records-n1-3trillion-revenue-in-2019-exceeds-target-by-n404billion/