The Nigeria Customs Service (NCS) has suspended the implementation of a 4 percent charge on the Free-on-Board (FOB) value of imports, following intense criticism from industry stakeholders and ongoing consultations with the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.
The announcement was made on Tuesday by Abdullahi Maiwasa, Assistant Comptroller of Customs, who explained that the suspension would allow for broader stakeholder engagement and consultations on the framework for implementing the new levy.
The charge, which was introduced under the Nigeria Customs Service Act (NCSA) 2023, was set to replace the 1 percent Comprehensive Import Supervision Scheme (CISS) previously used to fund customs modernization. However, concerns over the impact on businesses and the cost of imports led to calls for a review.
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Maiwasa stated that the decision aligns with Section 18(1)(a) of the NCSA 2023, which provides the legal framework for the charge. He added that with the expiration of the contract agreement with service providers such as Webb Fontaine, there was an opportunity to holistically review the customs revenue framework.
The previous funding arrangement, which separated the 1 percent CISS and 7 percent cost of collection, was said to have created inefficiencies and funding gaps in customs operations. The new law sought to consolidate funding under a 4 percent charge on the FOB value of imports, ensuring a sustainable revenue source for modernizing customs operations.
However, the timing and structure of the charge drew significant backlash from importers, manufacturers, and industry stakeholders, who feared it would increase import costs and exacerbate inflationary pressures. In response, the NCS opted to suspend implementation to allow for further deliberations.
“This transition period will allow the Service to optimize the management of these frameworks to serve our stakeholders and the nation’s interests better,” Maiwasa said.
Customs’ Shift Towards Digital Modernization
The NCS remains focused on modernizing its operations through technological innovations. Maiwasa highlighted that Section 28 of the NCSA 2023 empowers Customs to develop and maintain electronic systems for information exchange between the Service, other government agencies, and traders.
He pointed to several digital initiatives already in place, including the recently launched B’Odogwu clearance system, which is aimed at improving transparency and reducing clearance times. Other initiatives authorized by the Act include:
- Single Window implementation (Section 33) – a unified platform for trade facilitation.
- Risk management systems (Section 32) – to enhance efficiency and security in customs processing.
- Non-intrusive inspection equipment (Section 59) – allowing for faster and more accurate cargo inspections.
- Electronic data exchange facilities (Section 33(3)) – to streamline communication between stakeholders.
Concerns Over Import Costs and Inflation
The initial announcement of the 4 percent charge on FOB imports raised alarm among importers, who argued that the new levy would increase the cost of goods, further worsening inflation. Nigeria has been grappling with soaring prices across essential commodities, with businesses already struggling under high exchange rates and rising production costs.
Industry analysts warned that introducing additional import charges at a time of economic hardship could force many businesses to pass the costs onto consumers, leading to even higher prices for goods and services. The pushback from stakeholders ultimately pressured the government to reconsider the policy’s timing and implementation.
With the suspension in place, the NCS is expected to engage stakeholders in consultations on how best to structure the funding mechanism for customs modernization without overburdening importers.
While the government insists that customs reforms are necessary to improve efficiency and curb revenue leakages, importers and business owners argue that policies must be implemented gradually and strategically to prevent unintended economic consequences.
The outcome of the upcoming consultations will determine whether the 4 percent FOB charge will be modified, reduced, or scrapped altogether. However, for now, importers can breathe a sigh of relief as the additional levy has been put on hold.