‘It’ll lead to cargo diversion’ — manufacturers kick against 4% FOB charge

The Manufacturers Association of Nigeria (MAN) has kicked against the reintroduction of the 4 percent free on board (FOB) charge by the Nigeria Customs Service (NCS).

According to NAN, Segun Ajayi-Kadir, the director-general of MAN, said the levy, which took effect on August 4, contradicts the federal government’s earlier suspension of the charge.

He warned that the policy would significantly raise the cost of importing raw materials, machinery, and spare parts not available locally.

The director-general said the sudden reintroduction of the levy prompted the association to carry out a rapid technical assessment, which revealed “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,” Ajayi-Kadir said.

“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.”

The MAN DG said other West African countries, such as Ghana, Côte d’Ivoire, and Senegal, peg inspection or collection fees between 0.5 percent and one percent FOB, with higher levies applied only to luxury or non-essential imports.

“The Nigeria Customs Service’s unilateral imposition of a uniform four percent FOB levy would raise the cost of doing business, encourage informal cross-border sourcing, lead to cargo diversion, and promote under-declaration,” he said.

‘DELAY IMPLEMENTATION TILL DECEMBER FOR IMPACT ASSESSMENT’

Ajayi-Kadir urged the government and the NCS to halt the implementation until December 31 to allow for a proper impact assessment and consultations with stakeholders.

This, the MAN DG 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,” Ajayi-Kadir said.

“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.”

He recommended that the customs retain the existing 1 percent CISS plus a 7 percent cost of collection fee.

Ajayi-Kadir said the arrangement would balance government revenue generation with industrial competitiveness, while saving Nigerians from avoidable price increases.

On February 4, the NCS announced plans to implement a 4 percent charge on the FOB value of imports.

The plan was later suspended to allow for comprehensive stakeholder engagement and consultations regarding the implementation framework.

However, on July 23, 2025, the customs announced it will replace its 7 percent collection fees from the federation account and 1 percent CISS with a 4 percent FOB levy at the port.

The service said with the introduction of a new trade platform, it had no choice but to reintroduce the levy to enhance its operational efficiency and fund the technology and modernisation programme of the service.

The platform, called the unified customs management system (UCMS), popularly known as B’Odogwu, is a fully digital platform designed to streamline customs operations, eliminate bottlenecks, and promote transparency in Nigeria’s import and export systems.