Manufacturers, others decry new 4% levy on imports

The imposition of a four per cent increase in charges on all consignments imported into the country by the Nigeria Customs Service (NCS), last week, drew disapproval from manufacturers, economists and other stakeholders at the weekend. The stakeholders said the hike could plunge Nigerians into deeper financial crisis. Experts also said raising charges on imported […]

The imposition of a four per cent increase in charges on all consignments imported into the country by the Nigeria Customs Service (NCS), last week, drew disapproval from manufacturers, economists and other stakeholders at the weekend. The stakeholders said the hike could plunge Nigerians into deeper financial crisis.

Experts also said raising charges on imported goods negates the federal government’s bid to curtail inflation in the 2025 fiscal year.

The increment was embedded in the Comprehensive Import Supervision Scheme (CISS) which rose from 1 per cent to 4 per cent at the close of work last week Monday.

Investigations at the Tin-Can Island Port revealed that the implementation of the CISS started on Tuesday last week, with the development generating concerns among stakeholders who said the rise would impact negatively on the cost of doing business at the nation’s seaports.

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The CISS is a pool from which the NCS draws funds to implement its modernisation projects. It is otherwise regarded as an administrative charge.

According to the NCS, the 4% charge on the Free On-Board (FOB) value of imports is in accordance with the provisions of the Nigeria Customs Service Act (NCSA) 2023.

With the implementation of the new FOB charge, the NCS is expected to generate N2.84 trillion annually, going by the country’s annual imports estimated at N71 trillion.

 

Additional burden amidst a long list of import charges

For manufacturers and importers, the increment creates additional burden on importers amidst a long list of charges on imports.

In addition to the charge on FOB value, importers are expected to pay the statutory import duties on specific items except those exempted by the federal government.

Daily Trust findings show that Customs duties vary for different items, typically from 5% to 35%, and are assessed with reference to the prevailing Harmonised Commodity and Coding System (HS code).

And just as the Customs was implementing the new increment, the Nigeria Ports Authority (NPA) implemented a 15% increase in tariff.

Dr Eugene Nweke, former president of the National Association of Government Approved Freight Forwarders (NAGAFF) and founder of Sea Empowerment and Research Centre (SEREC) chronicled the burden of taxes on cargoes exiting the seaports.

The charges he listed include a 7 per cent port development levy with several unregulated terminal handling charges, duplicated delivery charges, positioning fees, scanning fees, labour fees, etc.

He said most of the charges are not adding value to the port system but rather killing the economy.

He stated that there is N100, 000 Electronic Call-Up System ETO fee charged per in and out of a truck at the terminal.

 

‘Gov’t should suspend this new charge’

Speaking with Daily Trust, the Chairman of the Ogun State chapter of the Manufacturers Association of Nigeria (MAN), George Onafowokan, described the 4 per cent FOB Charge on imports as “ill-conceived”.

He said the federal government has been able to stabilise the economy as evident in the naira appreciation.

According to him, the 4 per cent on FOB will put fresh pressure on inflation, thereby eroding the success recorded on the economy in the last two years.

Onafowokan, who is the Chief Executive Officer of Coleman Technical Industries Limited (CTIL), called for immediate suspension of its implementation, saying, “It’s very ill-conceived. It’s something that should be suspended immediately.

“I don’t think it’s in the interest of this country, its people, to actually be having a push on the inflation now. A 4 per cent on FOB is something that basically will put an unnecessary increase in the cost of raw materials and every material brought into this country. Invariably, it will be passed onto the consumers and then you have another cost push into the inflationary trend.

“I think the country has been through enough that we need to actually slow down to see how much we can drain out of it rather than now, let’s see how we can progress from the stabilisation that they have been effectively able to achieve. It’s like taking yourself forward and bringing yourself backwards.

“A 4 per cent on FOB is a disaster waiting to happen. We give them kudos for what they’ve done but then they should not put themselves back with… you don’t shoot yourself in the foot. To me, a 4 per cent charge is like shooting ourselves in the foot”, he stressed.

Also, a Professor of Economics, Sheriffdeen Tella, said the policy should be suspended.

He said: “Well, it will increase the cost of those goods and the goods will become more expensive because the exchange rate is already affecting them and other costs. So, the 4 per cent charge will add to it. The issue of wanting to tame inflation will not work.

“Yes, the government has to suspend it for now because we are talking of the high cost of production already and it’s going to add to that high cost”, he said.

 

Increment makes no sense – Saraki

Former Senate President, Senator Bukola Saraki, in a post on his X handle (formerly Twitter) on Saturday, faulted the increment, saying it makes no sense.

He cautioned that importers would pass the cost onto consumers who are already going through a lot, calling on the government to “urgently reconsider the policy.”

He wrote: “With our annual imports estimated at N71 trillion, the new 4% Customs administrative charge on Free On Board (FOB) value will come to N2.84 trillion. Does this mean that the customs service requires an additional N2.84 trillion annually to do its job?

“Don’t forget they already have a budget and get an incentive percentage on total Customs duties collected. Now, they want to spend more than $1.5 billion on running costs in a country with the poverty index we have and with many businesses closing down. Importers will inevitably pass these costs on to consumers, further straining the budgets of millions of struggling households.

“This new fee of 4% is not even restricted to luxury goods but across all imports, so even for industries that import their raw materials whose duties are only 5%, the customs agency will now charge importers an extra 80% of the duty amount as administrative fees!

“How can this make sense or support the government’s policy of promoting the ease of doing business? The government must urgently reconsider this policy and put it on hold immediately. Especially, not now, with what Nigerians are going through”, he said.

As of the time of filing this report, Saraki’s comment has generated over 162,000 views and 322 comments, with some of his followers backing his concern over the government’s action, which they said will add more burden on Nigerians in the name of widening the tax net.

One of his followers, Mohammed Bashir Abdulyekeen, said what the government needs is “sound policies on how to get the larger percentage of its citizenry out of poverty and not further them into it courtesy of harsh taxation measures in the guise of widening the tax net.”

 

It’s in line with provisions of our Act – Customs

Speaking with Daily Trust over the phone on the issue, the National Public Relations Officer of the NCS, Abdullahi Aliyu Maiwada, said the recent 4 per cent Free On Board (FOB) charge was in line with the Nigeria Customs Service Act (NCSA) 2023.

According to him, the Act replaces the long-standing Customs and Excise Management Act (CEMA) and other related laws and is a product of extensive consultations, constructive dialogue and collaborative efforts with key industry players, government agencies and other stakeholders.

“In line with the provisions of Section 18 (1) of NCSA 2023, the NCS is implementing a 4% charge on the Free On-Board (FOB) value of imports. The FOB charge, which is calculated based on the value of imported goods, including the cost of goods and transportation expenses incurred up to the port of loading, is essential to driving the effective operation of the service”, he said.

On concerns raised by businesses, he said, “The NCS acknowledges concerns raised by stakeholders over the sustained collection of 1% Comprehensive Import Supervision Scheme (CISS) fee (a regulatory charge imposed for funding Nigeria’s Destination Inspection Scheme) alongside the 4% FOB charge.

“Subsequently, as a responsive and responsible government agency, the service wishes to assure the general public that extensive consultation is ongoing with the Federal Ministry of Finance to address all agitations raised by our esteemed stakeholders,” he stated.