COMFORT EKELEME
The Manufacturers Association of Nigeria (MAN) has expressed its objection to the subtle reintroduction of the 4per cent Free On- Board (FOB) charge, in contravention of the earlier widely publicized suspension of the charge by the federal government.
MAN in a statement signed by its Director General, Segun Ajayi-Kadir said the reintroduction of the 4per cent FOB charge is in contravention of the earlier widely publicized suspension of the charge by the federal government.
The Association however, urged the federal government and the Nigeria Customs Service (NCS) to halt the implementation of the 4per cent FOB charge and set a timeframe ending on the 31st of December 2025 for impact assessment and inclusive stakeholders’ consultation to determine the appropriate level of charges that will guarantee the efficient performance of NCS.
According to MAN, this timeframe will just be in sync with the January 2026 take-off date for the recently introduced Tax Laws and would allow room for the conveyance of a proper technical session with strategic stakeholders to discuss issues germane to the survival of affected businesses in Nigeria and the development of business-friendly implementation guidelines.
“The NCS should intentionally align with prevailing best practices with comparable economies and be supportive of the productive sector of the economy. In the meantime, the NCS should retain the current 1per cent CISS + 7per cent cost of collection fee, which balances revenue generation with industrial competitiveness to save 230 million Nigerians from avoidable price escalation.
“Establish a well-structured engagement with relevant stakeholders, including MAN and other organized private sector groups and stakeholders, for regular dialogue on trade facilitation and customs-related issues.
“Prioritize trade facilitation over revenue generation and exemplify the often voiced commitment to a thriving and buoyant manufacturing sector as a sustainable source of tax revenue for the Government, employment and wealth creation for the nation. This means empathy with NCS stakeholders,” MAN said.
Speaking further, MAN noted that it is pertinent to draw the attention of the government and, by extension, the NCS that the Nigerian Manufacturing sector is struggling and currently shrinking.
MAN maintained that 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 said.
According to reports, the regime of 1per cent Comprehensive Import Supervision Scheme (CISS) and the 7per cent cost of collection fee ends with the introduction of a single 4per cent FOB charge.
MAN maintained 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.
MAN noted that manufacturers were genuinely concerned that it would lead to a significant increase in the cost of raw materials, machine and spare parts that are not available locally and therefore have to be imported.
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.
“For the record, 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. This is because it resonates 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.
“We are, however, concerned that the prevailing situation is achieving the exact opposite of these progressive ideals,” MAN added.
Giving the concerns & implications for the manufacturing sector, MAN said the sudden re-commencement of the 4per 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.
Also, that the outcomes show disquieting revelations that portend severe implications for the manufacturing sector.
“The Nigerian manufacturing sector 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 4per cent FOB charge on the value of imports under the prevailing tough economic conditions is not industry-friendly and certainly not development-oriented,” MAN said.
