Manufacturers, agents fault Customs 4% FOB charge, fear huge losses

Manufacturers and clearing agents in Nigeria’s trade sector have raised opposition to the four percent FOB charge on imports imposed by the Nigeria Customs Service (NCS) making it more expensive to import goods into Nigeria.

The FOB charge, which is calculated based on the value of imported goods, including transportation costs up to the port of loading, is supposed to serve “as a measure to enhance the agency’s operational efficiency,” Bashir Adeniyi, the comptroller-general of the Service said in a statement on Thursday.

Higher import costs mean importers will pay more to bring goods into Nigeria, a cost that will likely be passed on to consumers.

The Association of Nigeria Licensed Customs Agents (ANLCA) frowned at the sudden introduction of the charge and appealed for an immediate withdrawal to ease high costs.

Emenike Kingsley Nwokeoji, the association’s president in a statement stated that the NCS must not be made a major revenue-generating agency to the detriment of agonising Nigerians under a skyrocketing inflation.”

Latest NBS data showed that consumer prices rose at a faster annual pace in December 2024 to 34.80 percent from 34.60 percent in November.

The NBS Foreign Trade in Goods Statistics Q3 2024, also showed that machinery, refined petroleum, vehicles, cereal, and pharmaceuticals are some of the most imported products to Nigeria, with machinery, which is essential for industrial and manufacturing processes, accounting for approximately 20 percent of imports.

Since many of these imports are already expensive due to foreign exchange challenges, an additional charge makes them even pricier.

“For industries that rely on imported raw materials, this charge will drive duty payments up by 80 per cent, significantly inflating production cost and eroding competitiveness,” said Adewale-Smatt Oyerinde, director general of Nigeria Employers’ Consultative Association (NECA).

NECA argues that the introduction of the levy is only a desperate attempt by the NCS to meet its N10 trillion revenue target contained in the 2025 proposed national budget, and estimated up to N2.84 trillion in additional costs for private businesses, including an 80 percent increase in duties paid by industries.

“This levy appears to be a desperate attempt to meet revenue projections at the expense of businesses and ordinary Nigerians,” Oyerinde said. “While the government may achieve its revenue goals, the unintended consequences will be severe—higher costs of goods, business closures, rising unemployment, and worsening economic hardship for millions of citizens.”

“Many businesses are experiencing a worrying downturn due to unsustainable operating costs. Increasing port tariffs is therefore ill-timed and could signal a departure from the government’s avowed efforts and commitment to the ease of doing business.

Read also: Prices seen rising as Customs imposes 4% FOB charge on imports

Manufacturers have decried the timing of the levy reckoning it would strain industrial activities and indirectly stem revenue with possible job losses.

“The manufacturing sector can ill-afford such an increase at this time; it runs against the present administration’s efforts at making Nigeria a trading hub in the West African sub-region, and would definitely constitute a drag in the efforts of government to stabilise the economy in the year 2025,” said Segun Ajayi-Kadir, director general of Manufacturers Association of Nigeria (MAN).

“Nigeria must remain competitive in regional trade. Neighbouring countries with more efficient and cost-effective ports will become far more attractive alternatives, leading to increased cargo diversion,” the group said.

It fears the ripple effects will be more severe than Nigerians are ready to deal with.

With the new introduction, a car valued at N30 million will have an extra N1,200,000 in value, as per the four percent increase in FOB, which will push up the cost of payable import duties. Duties imposed range from five percent to 35 percent of the car’s value, according to NCS data, depending on the type of car and its engine capacity.

The same applies to imported machinery. FOB charge increases the Cost, Insurance, and Freight (CIF) value, which serves as the basis for calculating import duties and Value Added Tax (VAT). A higher CIF value further escalates the overall cost of importing machinery.

The pharmaceutical sector is not exempted. Despite an executive order removing import duties on certain medicines last year, the four percent FOB charge still applies to import costs.

While importers may not pay import duties, the cost of the goods will still be slightly higher due to this charge, which could influence the final pricing of pharmaceutical products in the Nigerian market.

“Many businesses are experiencing a worrying downturn due to unsustainable operating costs. Increasing port tariffs is therefore ill-timed and could signal a departure from the government’s avowed efforts and commitment to the ease of doing business,” MAN stated.

The decision to raise the FOB charge comes amid the collection of the one percent Comprehensive Import Supervision Scheme (CISS) fee.

The CISS fee, originally introduced to fund Nigeria’s Destination Inspection Scheme, is still being enforced alongside the newly introduced FOB charge, leading to increased financial strain on importers and businesses that rely on foreign goods. Small business credit schemes.

The NCS assured that discussions are ongoing with the Federal Ministry of Finance to “address all agitations raised” by industry players and importers.

In a statement, the NCS urged stakeholders to support what it described as a “legally binding initiative,” in line with the provisions of Section 18 (1) of NCS Act of 2023.