Customs suspends implementation of 4% FOB charge

The Nigerians Customs Service has suspended the implementation of the widely criticised four per cent Free-on-Board value on imports.

A statement signed by the Customs National Public Relations Officer, Abdullahi Maiwada, disclosed the latest development on Tuesday in Abuja.

The amount, as stipulated in Section 18(1)(a) of the Nigeria Customs Service Act 2023, has already raised concerns among businesses struggling with high operating costs.

Maiwada said the suspension presents an opportunity to review our revenue framework holistically.

The statement read, “The Nigeria Customs Service hereby announces the suspension of the implementation of four per cent Free-on-Board value on imports as provided in Section 18(1)(a) of the Nigeria Customs Service 2023. This is the sequel to ongoing consultations with the Honourable Minister of Finance and Coordinating Minister of the Economy, Mr Olawale Edun, and other Stakeholders.

“This suspension will enable comprehensive stakeholder engagement and consultations regarding the Act’s implementation framework.

He added that the suspension aligns with the exit of the contract agreement with the Service providers, including Webb Fontaine, which were previously funded through the one per cent Comprehensive Import Supervision Scheme.

“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 one per cent Comprehensive Import Supervision Scheme.

“This presents an opportunity to review our revenue framework holistically.”

The FOB charge, which is calculated based on the value of imported goods, including transportation costs up to the port of loading, means importers will pay more to bring goods into Nigeria, a cost that will likely be passed on to consumers.

The Nigerian Employers Consultative Association said the charges will impose an additional N2.84tn in the cost on businesses, worsening economic hardship.

Under the previous funding arrangement repealed by the NCSA 2023, the service said separating the one per cent CISS and seven per cent cost of collection created operational inefficiencies and funding gaps in customs modernisation efforts.

It noted, however, that the new Act addresses these challenges by consolidating “not less than four per cent of the Free-on-Board value of imports,” designed to ensure sustainable funding for critical customs operations and modernisation initiatives.

The statement added, “This transition period will allow the Service to optimise the management of these frameworks to serve our stakeholders and the nation’s interests better.

“The Act further empowers the Service to modernise its operations through various technological innovations. Specifically, Section 28 of the NCSA 2023 authorises the development and maintenance of 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,” the statement stated.