Manufacturers Association of Nigeria (MAN) Slams Nigeria Customs Service Over 4% FOB Charge

1.0 The Manufacturers Association of Nigeria (MAN) has expressed grave concern over the reintroduction of the 4% Free-on-Board (FOB) charge by the Nigeria Customs Service (NCS), effective August 4, 2025. According to MAN, this charge will lead to a significant increase in the cost of imports, particularly raw materials and machinery, which will exacerbate the financial burden on manufacturers.

2.0 The Impact on Manufacturers

MAN conducted a rapid technical assessment and found that the 4% FOB charge will result in a much higher cost burden than the previous 1% Comprehensive Import Supervision Scheme (CISS) and 7% cost of collection fee. This will fuel inflation, which already stands at 21.88% as of July 2025, and undermine the government’s efforts to reduce the cost of doing business.

2.1 The notion that the charge streamlines previous multiple charges and reduces cost of cargo clearance does not correspond with the reality. The fact is that the cost burden of the 4% charge on manufacturing concern is enormously higher than the combined effect of 7% surcharge and 1% CISS levy. For instance, the new regime seeks to charge 4% of the total value of imports, which is higher than the previous regime where the 7% surcharge is based on duty payable. Except in the case of luxury goods and prohibited categories (with duty rates above 35%) a threshold analysis reveals that the 4% FOB levy will generally result in a much higher cost burden than the previous 1% CISS + 7% collection structure. So, retaining the previous charge structure better ensured adequate revenue mobilization for Customs without penalizing essential industrial imports. This is more so that some of our members have reported that the 7% surcharge subsists.

2.2 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. In fact, costs associated with the 4% 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% as at July 2025, and undermine the prevailing struggle with high inflation.

2.3 In the West African sub‑region, comparator economies such as Ghana, Côte d’Ivoire and Senegal have maintained targeted inspection or collection fees within the 0.5%–1% FOB range, focusing high levies only on luxury or non-essential imports. As such, the Nigeria Customs Service’s unilateral imposition of a uniform 4% FOB levy would raise the cost of doing business, incentivize informal cross‑border sourcing, cargo diversion and encourage under‑declaration.

2.4 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 4% FOB charge on the value of imports under the prevailing tough economic conditions is not industry-friendly and certainly not development-oriented. This is better illustrated by the scenario painted below:

3.0 Comparative Analysis

3.1 MAN noted that comparator economies in the West African sub-region, such as Ghana, Côte d’Ivoire, and Senegal, have maintained targeted inspection or collection fees within the 0.5%-1% FOB range. The unilateral imposition of a uniform 4% FOB levy by NCS would raise the cost of doing business, incentivize informal cross-border sourcing, cargo diversion, and encourage under-declaration.

3.2 The NCS is yet to conduct a proper assessment to ascertain the possible implications of the introduction of the charge on the delicate inflation trend, the cost of living for about 230 million Nigerians, and the struggling manufacturing sector and the economy at large.

3.4 Most disturbing is the fact that the B’Odogwu platform is yet to be integrated with other relevant trade facilitation Agencies of Government. For instance, SONCAP is not integrated and when there is a need to upload other relevant documents, companies are compelled to go to Customs Command overseeing the point of entry of their cargoes to seek help and human interface. This breeds inefficiency, further causes delay in the cargo clearance process and promotes rent-seeking activities, all of which combine to increase the cost of doing business in Nigeria.

Recommendations

MAN strongly objects to the reintroduction of the 4% FOB charge and recommends that the Federal Government and NCS:

– Halt the implementation of the 4% FOB charge and set a timeframe for impact assessment and inclusive stakeholders’ consultation.
– Retain the current 1% CISS + 7% cost of collection fee, which balances revenue generation with industrial competitiveness.
– Establish a well-structured engagement with relevant stakeholders for regular dialogue on trade facilitation and customs-related issues.
– Prioritize trade facilitation over revenue generation and support the productive sector of the economy.

Conclusion

MAN emphasized that the Nigerian manufacturing sector is struggling and currently shrinking. The future of the Nigerian economy depends on its capacity to upscale production, improve export of manufactured products, and enhance steady inflow of foreign exchange and investment. MAN urged the government to address the challenges limiting the performance of the sector with appropriate interventions.