What's Happening?
The Manufacturers Association of Nigeria (MAN) has expressed strong opposition to the Nigeria Customs Service's reintroduction of a four percent Free on Board (FOB) charge, effective August 4. According to Segun Ajayi-Kadri, Director-General of MAN, this move contradicts the government's previous suspension of the charge and is expected to significantly increase the cost of importing essential raw materials, machinery, and spare parts. Ajayi-Kadri highlighted that the charge is higher than the combined effect of existing surcharges and levies, and could lead to increased business costs, informal cross-border sourcing, and cargo diversion. He urged the government to halt the implementation and extend the timeline to December 31 for a comprehensive impact assessment and stakeholder consultation.
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Why It's Important?
The reintroduction of the four percent FOB charge by the Nigeria Customs Service could have significant implications for the manufacturing sector in Nigeria. By increasing the cost of importing necessary materials, the charge may hinder industrial competitiveness and lead to higher consumer prices. This could affect the economic stability of Nigeria, as manufacturing is a key component of the country's economy. The opposition from MAN underscores the potential negative impact on business operations and the need for a balanced approach to revenue generation that does not compromise industrial growth.
What's Next?
MAN has called for the suspension of the charge and proposed extending the implementation timeline to December 31. This would allow for a thorough impact assessment and consultation with stakeholders to determine appropriate charges that ensure efficient customs operations without burdening manufacturers. The association suggests retaining the current one percent Comprehensive Import Supervision Scheme (CISS) and a seven percent cost of collection fee in the interim, to balance revenue generation with industrial competitiveness.
