Consumers may suffer over FOB charge reintroduction – OPS
Members of the Organised Private Sector (OPS) have kicked against the reintroduction of the four per cent Free on Board (FOB) charge by the Nigeria Customs Service (NCS), which took effect on August 4. In February, the Nigeria Customs Service (NCS), suspended the 4 per cent FOB charge on imports after sustained pressure from the […]
Nigeria Customs Service (NCS)
Members of the Organised Private Sector (OPS) have kicked against the reintroduction of the four per cent Free on Board (FOB) charge by the Nigeria Customs Service (NCS), which took effect on August 4.
In February, the Nigeria Customs Service (NCS), suspended the 4 per cent FOB charge on imports after sustained pressure from the major stakeholders.
The National Public Relations Officer of the service, Abdullahi Maiwada, who announced this in a statement, explained that the measure is necessary to ensure clarity, maintain consistency in customs operations, and prevent any disruptions in clearance processes.
But in a statement the Manufacturers Association of Nigeria (MAN) and the Nigeria Employers’ Consultative Association (NECA), expressed worry over the reintroduction of the 4 percent Free-on-Board (FOB) levy, highlighting the consequences on the business climate.
The bodies noted that customers may suffer the consequences as it would significantly increase the cost of importing raw materials, machinery, and spare parts that are not available locally.
The Director-General of MAN, Segun Ajayi-Kadri, said the move contradicts the government’s widely publicised suspension of the charge.
He noted that manufacturers were concerned it would significantly increase the cost of importing raw materials, machinery, and spare parts that are not available locally.
Ajayi-Kadri explained that the sudden reintroduction of the four per cent FOB charge led MAN to conduct a rapid technical assessment to confirm the implications for the sector.
The results, he said, showed unsettling issues that could severely impact manufacturing.
“The idea that the charge streamlines previous multiple charges and reduces cargo clearance costs does not reflect reality.
“The fact is that the cost of the four per cent charge on a manufacturing company is enormously higher than the combined effect of the seven per ent surcharge and one per cent Comprehensive Import Supervision Scheme (CISS) levy,” he said.
He added that in other West African countries like Ghana, Côte d’Ivoire, and Senegal, targeted inspection or collection fees are kept within a 0.5 per cent to one per cent FOB range, with higher levies only on luxury or non-essential imports.
“The Nigeria Customs Service’s unilateral imposition of a uniform four per cent FOB levy would raise the cost of doing business, encourage informal cross-border sourcing, lead to cargo diversion, and promote under-declaration,” the DG noted.
Ajayi-Kadri urged the Federal Government and the Nigeria Customs Service to stop implementing the four per cent FOB charge and set a new timeline for its implementation.
…FG should extend to Dec. 31
He suggested they extend it to Dec. 31, to allow for an impact assessment and consultation with stakeholders.
This, he said, would determine an appropriate level of charges that would ensure the customs service performs efficiently.
“This timeframe would align with the January 2026 take-off date for recently introduced tax laws.
“It would allow a proper technical session with strategic stakeholders to discuss issues vital to the survival of affected businesses in Nigeria and the development of business-friendly implementation guidelines,” the DG said.
Also speaking, the Director- General, Nigeria Employers’ Consultative Association (NECA), Wale-Smatt Oyerinde, stressed that the reintroduction of the levy would increase the cost of operation and invariably affect the consumers.
“Our position still remains that the business environment and many organizations as it were, especially the manufacturing, are still coming out of losses and beyond losses, we still have issues with high interest rates, high inflation rates, which is both affecting the business from one perspective and also affecting the disposable income of an average Nigerian and worker.
“The reintroduction of the 4 percent FOB, while we commend the government for taking it off or suspending it before, the reintroduction does have the potential of escalating the cost of goods and services because one way or the other. The 4 percent will feed back into the cost of production, operation, and somebody will bear the cost in the long run, and most times it is the consumer.
“Why the business will take part of the heat, the consumer will also take part of the heat,” he said.
He urged the federal government to maximize the resources from fuel subsidies rather than increase levies for business.