Customs Bows To Pressure, Suspends 4% FOB Charge

The Nigeria Customs Service (NCS) has officially suspended the implementation of the controversial four per cent Free-on-Board (FOB) charge on imports, a decision announced on Tuesday.

This suspension comes after significant pressure from business stakeholders and industry groups who raised concerns about the sudden introduction of the levy without adequate consultation.

Initially set to enhance customs operations and revenue generation, the four per cent charge was met with backlash from organisations like the Lagos Chamber of Commerce and Industry (LCCI).

They argued that the abrupt enforcement could disrupt trade, increase operational costs, and ultimately hinder economic growth in Nigeria.

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LCCI’s director general, Chinyere Almona, had highlighted that the lack of prior notice or stakeholder engagement contradicted international best practices and could lead to significant delays in shipments at ports.

Also, the Nigeria Employers’ Consultative Association (NECA), with Nigeria’s annual imports estimated at N71 trillion, the newly introduced levy will impose an additional N2.84 trillion in costs on importers and businesses.

In response to these concerns, the NCS stated that it would engage in further consultations with stakeholders to address their grievances.

The service said the suspension was to continue consultation with the minister of finance and coordinating minister of the economy, Olawale Edun.

According to the National public relations officer, Abdulahi Maiwada, the suspension will enable comprehensive stakeholder engagement and consultations regarding the Act’s implementation framework.

“The NCS hereby announces the suspension of the implementation of 4% Free-on-Board (FOB) value on imports as provided in Section 18(1)(a) of the Nigeria Customs Service (NCSA) 2023. This is sequel to ongoing consultations with the Minister of Finance and Coordinating Minister of the Economy, Olawale Edun and other Stakeholders.

“This suspension will enable comprehensive stakeholder engagement and consultations regarding the Act’s implementation framework. 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 1% Comprehensive Import Supervision Scheme (CISS). This presents an opportunity to review our revenue framework holistically.

“Under the previous funding arrangement repealed by the NCSA 2023, separating the 1% CISS and 7% cost of collection created operational inefficiencies and funding gaps in customs modernisation efforts. The new Act addresses these challenges by consolidating “not less than 4% of the Free-on-Board value of imports,” designed to ensure sustainable funding for critical customs operations and modernisation initiatives. This transition period will allow the Service to optimise the management of these frameworks to serve our stakeholders and the nation’s interests better,” Maiwada stated.

Maiwada stated that the suspension of the Levy would allow the Service to further engage with stakeholders while ensuring proper alignment with the Act’s provisions for sustainable funding of these modernisation initiatives.

“The Act further empowers the Service to modernise its operations through various technological innovations. Specifically, Section 28 of the NCSA 2023 authorises developing and maintaining electronic systems for information exchange between the Service, Other Government Agencies, and traders.

The Service is already implementing several digital solutions, including the recently deployed B’Odogwu clearance system, which stakeholders are benefiting from through faster clearance times and improved transparency. Other innovative solutions authorised by the Act include; Single Window implementation (Section 33), Risk management systems (Section 32), Non-intrusive inspection equipment (Section 59) and Electronic data exchange facilities (Section 33(3)).

“The suspension period will allow the Service to further engage with stakeholders while ensuring proper alignment with the Act’s provisions for sustainable funding of these modernisation initiatives. The NCS remains committed to implementing the provisions of the Act in a manner that best serves our stakeholders while fulfilling our revenue generation and trade facilitation mandate. We will communicate the revised implementation timeline following the conclusion of stakeholder consultations,” he stated.

The agency had previously justified the charge as a necessary measure under the Nigeria Customs Service Act 2023, aimed at improving operational efficiency. However, many in the business community viewed it as an additional financial burden amidst already high inflation and operating costs.

The suspension of the FOB charge is seen as a positive step towards fostering a more conducive business environment in Nigeria, allowing for continued dialogue between customs authorities and trade stakeholders to promote sustainable economic growth.