By Tochukwu Bliss, Abuja
Following widespread criticisms, the Nigerian Customs Service (NCS), yesterday announced the suspension of the implementation of the four per cent charge on the Free On-Board (FOB) value of imports.
NCS spokesperson, Abdullahi Maiwada, in a statement in Abuja, explained that the suspension follows ongoing consultations by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, with stakeholders.
Recall that the organized private sector (OPS) had criticized the levy, saying it would escalate inflation.
In particular, the Manufacturers Association of Nigeria (MAN), also yesterday, warned that the FOB can exacerbate de-industrialisation in the country.
Its Director-General, Segun Ajayi-Kadir, in a statement argued that added to the existing one per cent Comprehensive Import Supervision Scheme (CISS) fee, this new levy, places an undue and potentially crippling burden on manufacturers.
“It cannot be the intention of the government to decapitate the productive sector,” he said, especially against the government’s avowed commitment to promoting domestic production, incentivising exports, and creating a $1 trillion economy by 2030.
Describing the tax as particularly unwelcome at a time the government should rather focus on reducing the cost of doing business, as done in other climes, Mr. Ajayi-Kadir said it is even more worrisome coming amid a planned 15% increase in port charges.
Suspension of levy
Mr Maiwada, while announcing the suspension of the FOB, said a revised implementation timeline would be revealed following the conclusion of the consultation.
He also explained that the suspension would allow the Service to further engage with stakeholders while ensuring proper alignment with the provisions of the enabling Act for the sustainable funding of its modernisation initiatives.
He continued: “This suspension will enable comprehensive stakeholder engagement and consultations regarding the act’s implementation framework.
“The timing of this suspension aligns with the exit of the contract agreement with the service providers, including Webb Fontaine, which were previously funded through the one per cent Comprehensive Import Supervision Scheme (CISS).
“This presents an opportunity to review our revenue framework holistically.”
Last week Wednesday, the Service had announced that it would implement a four per cent charge on the FOB value of imports, in line with the provisions of section 18 (1) of the Nigeria Customs Service Act (NCSA) 2023.
said the move would worsen the country’s inflation rate.
Mr Maiwada explained that the previous funding arrangement, which was repealed by the NCSA 2023, separated the one per cent CISS and the seven per cent cost of collection.
He noted that this created operational inefficiencies and funding gaps in customs modernisation efforts.
According to him, the new Act addresses the challenges by consolidating about four per cent of the FOB value of imports to ensure sustainable funding for critical customs operations and modernisation initiatives.
We had expected that, in line with the prevailing economic reform agenda of the government, we should be witnessing a winding down of regulatory and official fees by government agencies and institutions.
Scaling regulatory fees
But MAN believes that rather than enforcing more taxes thereby catapulting the cost of production to over 118%,
the NCS would instead support trade facilitation given the prevailing economic downturn.
Mr. Ajayi-Kadir said: “We had expected that, in line with the prevailing economic reform agenda of government, we should be witnessing a winding down of regulatory and official fees by the government agencies and institutions.
“All government institutions should recommit to the reduction of the cost of doing business, expanding the scope of businesses and broadening the nation’s revenue base.” he said.
He further warned that if allowed to scale through, the additional 4% FOB will cause heavy disruption in supply chain, trigger raw materials stock-out in many manufacturing concerns and inflict higher cost of demurrage.
These will in turn further increase the huge volume of unsold inventories and worsen the competitiveness of Nigerian manufacturers.
“The introduction of the levy contradicts the principles of the ongoing Fiscal Policy and Tax Reforms and the spirit behind the tax bills currently being considered by the National Assembly.
“These efforts are targeted at eliminating multiplicity of taxes and reduction of tax burden for households, manufacturers and other private businesses.
“It will jeopardise the plan of the Federal Government to boost foreign exchange earnings through non-oil export, as many manufacturing exporters rely on imports for vital inputs and machines that are not available locally.
“The levy will jeopardise our aspiration to be an investment destination of choice and an industrial hub in the West African sub-region,” he said.
Pull quote
We had expected that, in line with the prevailing economic reform agenda of the government, we should be witnessing a winding down of regulatory and official fees by government agencies and institutions.
