MAN Says Re-introduction of 4% FOB Charge Will Increase Import Cost of Raw Material Above N6.6trn

The Manufacturers Association of Nigeria (MAN) has expressed grave concerns over the seeming reintroduction of the 4.0 per cent Free-on-Board (FOB) charge on imports by the Nigeria Customs Service (NCS), which became effective on August 4, 2025.

Director General of MAN, Segun Ajayi-Kadri, in a statement, noted that this came as a surprise, as the charge was commendably suspended by the Federal Government, following the overwhelming condemnation of the charge by virtually all stakeholders, who rightly opined that it was ill-timed and would certainly lead to an instant escalation of the cost of imports.

DG MAN said “for high-value imports such as raw materials and machinery, this will result in a significant net increase in cost and exacerbates the financial burden on manufacturers,” adding that “costs associated with the 4.0 per cent FOB charge will generally increase the import cost of raw materials not available locally above the N6.6 trillion recorded in 2024.

“Clearly the cost will be passed on to consumers and this will fuel inflation, which already stands at 21.88 per cent as at July 2025, and undermine the prevailing struggle with high inflation.”

He stated further that reports have shown that the regime of 1.0 per cent Comprehensive Import Supervision Scheme (CISS) and the 7.0 per cent cost of collection fee ended with the introduction of a single 4.0 per cent FOB charge.

Additionally, he said “Equally concerning is the prolonged glitch with the B’Odogwu platform of the Nigeria Customs Service (NCS), which has rendered the process of clearing goods at the ports comatose, with our members incurring demurrage and suffering stock-out in their factories.

“We deeply appreciate the assurance of the leadership of NCS that efforts are being intensified to restore effective operation of the platform.

“However, the problem persists and the attendant hardship for manufacturers and other users continues to mount.”

He affirmed that MAN is in support of the efforts of the government to streamline trade processes, reduce the cost of doing business at the port and enhance fiscal transparency, which resonated with the kernel of the association’s advocacy for a transparent, efficient and friendlier trade facilitation ecosystem that is more service-centric than revenue driven.

However, “we are, however, concerned that the prevailing situation is achieving the exact opposite of these progressive ideals,” Ajayi-Kadir added.

According to him, the sudden re-commencement of the 4.0 per cent FOB charge made MAN to conduct a rapid technical assessment to reconfirm the concerns of manufacturers and ascertain the implications of the charge on the sector, adding that “The outcomes show disquieting revelations that portend severe implications for the manufacturing sector.”

Ajayi-Kadir said the notion that the charge has streamlined previous multiple charges and reduced cost of cargo clearance did not correspond with the reality.

DG MAN said: “The fact is that the cost burden of the 4.0 per cent charge on manufacturing concern is enormously higher than the combined effect of 7.0 per cent surcharge and 1.0 per cent CISS levy.

“For instance, the new regime seeks to charge 4.0 per cent of the total value of imports, which is higher than the previous regime where the 7.0 per cent surcharge is based on duty payable.

“Except in the case of luxury goods and prohibited categories (with duty rates above 35 per cent) a threshold analysis reveals that the 4.0 per cent FOB levy will generally result in a much higher cost burden than the previous 1.0 per cent CISS plus 7.0 per cent collection structure.

“So, retaining the previous charge structure ensured better and adequate revenue mobilisation for customs without penalising essential industrial imports.

“This is more so that some of our members have reported that the 7.0 per cent surcharge subsists.”

He opined that in the West African sub region, comparative economies such as Ghana, Côte d’Ivoire and Senegal have maintained targeted inspection or collection fees within the 0.5 per cent and 1.0 per cent FOB range, focusing high levies only on luxury or non-essential imports.

“As such, the NCS’s unilateral imposition of a uniform 4.0 per cent FOB levy would raise the cost of doing business, incentivise informal cross border sourcing, cargo diversion and encourage under declaration.”

The Nigerian manufacturing sector, according to him, is already contending with a high exchange rate of over ₦1540/$, an exorbitant alternative energy cost burden of over ₦1.1 trillion as of 2024 and an alarming average interest rate of above 35 per cent.

“Therefore, introducing a blanket 4.0 per cent FOB charge on the value of imports under the prevailing tough economic conditions is not industry-friendly and certainly not development-oriented,” Ajayi-Kadir emphasized.

DG MAN also argued that the introduction of the 4.0 per cent FOB charge with its attendant consequence, as listed above, runs against the objectives of the relevant pillars of the Renewed Hope Agenda of Government, the National Development Plan 2021-2025, current industrial revolution initiatives and trade policy frameworks.

He noted that “All these efforts of the government seek to reduce the costs of local production, deepen domestic value chain addition and economic diversification.

“The reintroduction of this charge is antithetical to the expected outcomes of these laudable government initiatives.”

Accordingly, MAN urged the government to halt the implementation of the 4.0 per cent FOB charge and set a timeframe ending on December 31, 2025, for impact assessment and inclusive stakeholders’ consultation to determine the appropriate level of charges that will guarantee the efficient performance of NCS.

In the meantime, the Association urged NCS to retain the current 1.0 per cent CISS and 7.0 per cent cost of collection fee, which balances revenue generation with industrial competitiveness to save 230 million Nigerians from avoidable price escalation.

It is pertinent, it also said to draw the attention of the government and, by extension the NCS that the Nigerian manufacturing sector is struggling and currently shrinking.

“Truth be told, the future of the Nigerian economy highly depends on its capacity to upscale production, improve export of manufactured products and enhance steady inflow of foreign exchange and investment.

“Of course, this can only be actualised if the challenges limiting the performance of the sector are frontally addressed with appropriate interventions, as no economy can achieve steady growth and sustained development without a functional and highly productive manufacturing sector,” MAN emphasized.