THE Nigeria Customs Service (NCS) has suspended the controversial four per cent Free-on-Board (FOB) charge on imports.
The charges is provided in Section 18(1)(a) of the Nigeria Customs Service Act (NCSA) 2023.
In a statement of Tuesday, February 11 by its national public relations officer, Abdullahi Maiwada, the NCS said it has suspended the charge.
It said the decision was sequel to ongoing consultations with the Minister of Finance and Coordinating Minister of the Economy, Wale Edun and other stakeholders.
It stressed that the suspension would enable comprehensive stakeholder engagement and consultations on the framework regarding the implementation.
“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 1% Comprehensive Import Supervision Scheme (CISS).
“This presents an opportunity to review our revenue framework holistically,” the NCS stated.
Importers, manufacturers association, and other stakeholders had criticised the new charge, declaring it as outrageous.
They believe the levy could lead to increase in prices of goods and heighten inflation.
Under the previous funding arrangement repealed by the NCSA 2023, the NCS said separating the one per cent CISS and seven per cent cost of a collection created operational inefficiencies and funding gaps in customs modernisation efforts.
It noted that the new Act addresses the challenges by consolidating “not less than 4% of the Free-on-Board value of imports.”
The charge was designed to ensure sustainable funding for critical customs operations and modernisation initiatives.
It however, said, “This transition period will allow the Service to optimise the management of these frameworks to serve our stakeholders and the nation’s interests better.”
The Act further empowers the Service to modernise its operations through various technological innovations.
Specifically, Section 28 of the NCSA 2023 authorises developing and maintaining electronic systems for information exchange between the service, other government agencies, and traders.
The service is already implementing several digital solutions, including the recently deployed B’Odogwu clearance system, which stakeholders are benefiting from through faster clearance times and improved transparency.
Other innovative solutions authorised by the Act include single window implementation (Section 33); sisk management systems (Section 32); non-intrusive inspection equipment (Section 59); and electronic data exchange facilities (Section 33(3)).
The ICIR reported on Tuesday that the Manufacturers Association of Nigeria (MAN) had called for the suspension of the implementation of a four per cent charge on all FOB value of imports.
The association argued that implementing the levy would led to further rise in Inflation and an increase in the cost of doing business, which is at variance with the government’s ease of doing business drives.
“We had expected that the NCS would give priority to trade facilitation given the prevailing economic downturn, rather than exacerbating the spiraling cost of production.
“The indiscriminate increase in levy is contradicting the government’s preaching on ease of doing business. It will also make our cost environment less attractive for investors, thereby facilitating smuggling and loss of revenue for the Customs,” MAN had warned.
The association further expressed worries that the levy would cause heavy disruption in the supply chain, trigger raw materials stock-out in many manufacturing concerns, inflict higher cost of demurrage, increase the huge volume of unsold inventories, and worsen the competitiveness of Nigerian manufacturers.