4% FOB charge, needless burden on Nigerians

The recent reintroduction of a four per cent charge on the Free-on-Board value of imports coming into the country by the Nigeria Customs Service (NCS) will further exacerbate the burden on Nigerians. It has sparked a national outcry from the business community, especially the manufacturing sector, for self-evident reasons. For a populace that is already […]

The recent reintroduction of a four per cent charge on the Free-on-Board value of imports coming into the country by the Nigeria Customs Service (NCS) will further exacerbate the burden on Nigerians. It has sparked a national outcry from the business community, especially the manufacturing sector, for self-evident reasons. For a populace that is already weighed down by the high cost of items, this new measure will only add to their burdens.

This policy was first introduced six months ago, precisely in February 2025. However, the government was quick to suspend the implementation of the policy following a similar outcry that greeted its introduction. Suddenly, it was introduced in July, and its implementation commenced on August 4, 2025.

In place of this measure, MAN wants the government to revert to the previous system of one per cent of the Comprehensive Import Supervision Scheme and a seven per cent cost of collection fee. The group argues that this system balances revenue generation with industrial competitiveness.

Further, the government should note that this potentially harmful policy is coming on the heels of reports about rising stocks of unsold goods, with many of them expiring while in distributors’ shops or producers’ warehouses. Traders and manufacturers blamed this development on consumer resistance in response to the high prices of goods.

In January 2025, the Manufacturers Association of Nigeria (MAN) disclosed that its members recorded unsold inventory worth a staggering amount of N1.4 trillion. These high prices, according to the producers, are occasioned by the high costs of production across all sectors of the economy. MAN identified high inflation, a depreciating Naira, rising interest rates, escalating electricity tariffs, record low sales, multiplicity of taxes and levies, and insecurity as factors contributing to the high production costs. Most of the factors above are still at play in the economy, despite the reported downward trend in inflation for some months. For instance, CBN’s Monetary Policy Rate remains at 27.5 per cent, which means that manufacturers still pay much higher rates to access funds for business.  

This policy may indeed be counterproductive as it could force some manufacturers to fold up due to rising costs of production, and importers prefer other ports in the sub-region.  The Central Bank of Nigeria (CBN) has just published the July 2025 Purchasing Manager’s Index, a measure of changes in the level of economic activities within a period. Although the July PMI showed that the three sectors covered – Agriculture, Industry, and Services- recorded expansion for the eighth consecutive month, the expansion in industry was just marginal, with a PMI of just 51.1 points. The significance of this performance becomes clearer when it is noted that an index above 50 points shows expansion, while any index at 50 points indicates no change.

The government should be guided by dynamics in the economy, especially intelligence provided by economic indicators.

 A significant portion of the imports that come into Nigeria is raw materials or equipment used to produce goods. Nigeria imports such goods because the country does not produce them. Logically, subjecting intermediate goods to this additional charge in this high-cost environment can only force the importers, being manufacturers, to pass the resultant high costs to consumers by way of higher prices for the goods.

We call on the government to implement its policy of Nigeria First, which says that the government would give priority to locally made goods in the procurement of materials by its ministries, departments, and agencies.

The government should encourage our local industries to produce most of the goods we consume locally. This can be achieved by pursuing industrial policies that will offer quick wins for the country’s industrial sector by stimulating local production, including most of the raw materials currently being imported. Daily Trust believes that Nigeria, as a country, should be able to produce most of the raw materials locally.

This calls for a commitment to the Nigeria First policy, which aims to promote local production and reduce reliance on imports. The government says it is attracting foreign direct investment into the economy, which must be pursued strategically. It calls for the appropriate sequencing of policies. Without first strengthening the capacity of the local industrial base, introducing this type of charge on imports will surely lead to higher prices.

The government should also be aware of the fact that due to the rising cost of imports, the level of uncleared goods at the nation’s ports has shot up, with the demurrage on such goods rising as well. The increased cost of imports has led to a surge in uncleared goods at ports, with over 5,000 cargoes stuck, incurring over ₦2 trillion in demurrage costs. This does not synchronise with the picture of rising economic activities in the industrial sector as shown by the PMI for July.

Finally, a policy such as this should be based on comparative analysis. As MAN pointed out, West African countries like Ghana, Côte d’Ivoire, and Senegal maintain lower import levies, ranging from 0.5 per cent to one per cent of the FOB value, with higher levies only on luxury or non-essential imports. With this, the new policy will make Nigerian ports less competitive.