The Nigerian Customs Service has suspended the implementation of the widely criticised four per cent Free-on-Board value on imports.
A statement signed by the Customs National Public Relations Officer, Abdullahi Maiwada, disclosed the latest development on Tuesday in Abuja.
The amount, as stipulated in Section 18(1)(a) of the Nigeria Customs Service Act 2023, has already raised concerns among businesses struggling with high operating costs.
Maiwada said the suspension presents an opportunity to review the service’s revenue framework holistically.
The statement read, “The Nigeria Customs Service hereby announces the suspension of the implementation of four per cent Free-on-Board (FOB) value on imports as provided in Section 18(1)(a) of the Nigeria Customs Service 2023.
“This is the sequel to ongoing consultations with the Minister of Finance and Coordinating Minister of the Economy, Mr. Olawale Edun, and other stakeholders.
“This suspension will enable comprehensive stakeholder engagement and consultations regarding the Act’s implementation framework.”
He added that the 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.
He added, “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.
“This presents an opportunity to review our revenue framework holistically.”
The FOB charge, which is calculated based on the value of imported goods, including transportation costs up to the port of loading, means importers will pay more to bring goods into Nigeria, a cost that will likely be passed on to consumers.
Financial experts had raised alarm that the implementation of the four per cent Free-On-Board levy on imports would exacerbate inflation in the country.
The Nigeria Customs Service on February 5 announced its introduction of the FOB levy on imports.
According to the spokesman of the service, Abdullahi Maiwada, the introduction of the levy was in line with the provisions of the Nigeria Customs Service Act 2023.
“In line with the provisions of Section 18 (1) of NCSA 2023, the NCS is implementing a 4 per cent charge on the Free On-Board (FOB) value of imports.
“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,” Maiwada said.
However, a former Chairman, Manufacturers Association of Nigeria, Ogun Chapter, Wale Adegbite and Evans Osabuohien, a Professor of Economics, said that the levy would worsen the nation’s inflation rate.
In separate interviews with the News Agency of Nigeria on Monday in Ota, Ogun, Adegbite and Osabuohien of the Department of Economics, Covenant University, said that the policy would negatively impact the economy.
The former MAN chairman said that the 4 per cent levy by the NCS “is a disaster and will worsen an already bad situation with multiple devastating effects on the economy.
“Why would the government inflict more hardship on the population as this new policy will certainly lead to more price increases, thus further increasing the country’s inflation rate?
“In addition, the masses will suffer more because of the impending price increase without any corresponding increase in income,” Adegbite warned.
Also, Osabuohien said that though the new FOB policy by the NCS was meant to generate more revenue for the Federal Government, it would negatively impact the economy.
He said that the NCS action would increase the cost of living of households.
The economist explained further that the development would increase the cost of operations of Small and Medium Enterprises, especially those companies that depend on imported raw materials for their production.
“This additional cost to be incurred through the 4 per cent increase in FOB would be transferred to the consumers and it would automatically trigger an increase in the nation’s inflation rate,” Osabuohien said.
