The Manufacturers Association of Nigeria (MAN) has called on the government to prioritise improved trade facilitation measures to address the current constraints hindering the optimum peformance of the productive sector.
The Association stated this, while expressing deep concerns over reported plans by the Nigeria Customs Service to reintroduce the four per cent Free-on-Board Levy.
They cautioned against this unfavorable development, highlighting its potential catastrophic impact on the manufacturing sector and the broader Nigerian business community.
The director-general of MAN, Segun Ajayi-Kadir stated, “it is equally worrisome that this is coming at a time when there is still a looming threat of an unwarranted 15 percent hike in port charges. Our members are struggling with the astronomical increase in the effective import duty calculations and are contending with an unprecedented rise in energy costs.”
Ajayi-Kadir emphasised that what is needed now is the prioritization of improved trade facilitation measures that would alleviate the constraints affecting the productive sector’s performance.
He pointed out that, given the current economic downturn, imposing the levy would only exacerbate the rising cost of production, ultimately diminishing the disposable income of the average Nigerian.
He noted that “we had expected that, in line with the government’s existing economic reform agenda aimed at streamlining fiscal policies and fostering a progressive, business-friendly tax regime, we would see a reduction in the introduction of fees and levies by government agencies.
“This is a critical time for all government institutions to recommit themselves to reducing the cost of doing business, expanding the scope of enterprises, and incentivising new entrants amidst high business mortality rates.”
Ajayi-Kadir outlined compelling reasons against the implementation of the levy, including the already high cost of importation due to the prevailing exchange rate used for calculating customs duties.
He stated that this situation had resulted in the cost of imports increasing by over 118 per cent, jumping from N2.07 trillion in the first nine months of 2023 to N4.53 trillion during the same period in 2024.
He further added, “The levy will cause significant disruptions in the supply chain, trigger raw material shortages for many manufacturers, inflict higher costs of demurrage, increase the volume of unsold inventories, and worsen the competitiveness of Nigerian manufacturers.”
“This levy is being proposed at a time when headline inflation has reached a historical high of 34.8 per cent, the highest in nearly three decades, leaving many Nigerians struggling. Therefore, the immediate impact on the cost of locally produced items will be profound and far-reaching.”
Ajayi-Kadir also noted, “The levy will jeopardize our ambition to become a destination of choice for investment and an industrial hub in the West African sub-region.”
