THE Manufacturers Association of Nigeria (MAN) has called for the suspension of the implementation of a 4 per cent charge on all Free On-Board (FOB) value of imports recently imposed by the Nigerian Customs Service.
The MAN leadership said the levy will lead to a 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.
The ICIR reports that Customs announced the implementation of the 4 per cent charge on the Free On-Board value of imports in line with the provisions of the Nigeria Customs Service Act (NCSA) 2023.
“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,” Abdullahi Maiwada, the spokesperson of the service said in a statement on Tuesday, February 11.
Reacting to the development through a statement released on Tuesday and signed by the director-general of MAN, Segun Ajayi-Kadir, the association condemned the “sudden and inopportune introduction and implementation of the 4 per cent FOB Levy.”
MAN said it is an “unfortunate addition” to the 1 per cent Comprehensive Import Supervision Scheme (CISS) fee being paid by its members.
The association said it is concerned that the government through the NCS is introducing new levies at a time when it should be helping local businesses reduce the cost of doing business.
“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 statement noted.
The association stressed that the already high rate of calculating the customs duty exchange rate and the new levy will further escalate the cost of imported raw materials, which had earlier jumped by over 118 per cent from ₦2.07 trillion in the first nine months of 2023 to ₦4.53 trillion in the same period of 2024.
The association stressed that the levy will render Nigeria’s manufacturing sector uncompetitive and will increase smuggling appetite through unofficial trade routes.
“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.
“The levy will cause heavy disruption in the supply chain, trigger raw materials stock-out in many manufacturing concerns, inflict higher cost of demurrage, further increase the huge volume of unsold inventories, and worsen the competitiveness of Nigerian manufacturers.
According to MAN, 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 the multiplicity of taxes and reduction of tax burden for households, manufacturers, and other private businesses,” it added.
The introduction of the levy is an additional incentive to smuggling, trade diversion, under-declaration of duty, and other trade infractions that have bedeviled the country, stretched the capacity of Customs, and undermined the revenue profile of the country.
The ICIR has reported that the manufacturers have called for a fixed customs import-duty exchange rate to avert ‘price-gouging’ and curb inflation’s impact on businesses.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.