‘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.’
Siaka MOMOH
The Manufacturers Association of Nigeria (MAN) is gravely concerned over the apparent reintroduction of the 4% Free-on-Board charge on imports, effective August 4, 2025, according to a statement signed by Segun Ajayi-Kadir MAN’s Director-General.
In the statement, MAN argues that according to reports, the regime of 1% Comprehensive Import Supervision Scheme (CISS) and the 7% cost of collection fee ends with the introduction of a single 4% FOB charge.
For MAN, “This came as a surprise, as the charge was commendably suspended by the Federal Government, following the overwhelming condemnation of the charge by virtually all stakeholders, who rightly opined that it was ill-timed and would certainly lead to an instant escalation of the cost of imports. Manufacturers were genuinely concerned that it would lead to a significant increase in the cost of raw materials, machine and spare parts that are not available locally and therefore have to be imported.”
MAN adds that equally concerning is the prolonged glitch with the B’Odogwu platform of the Nigeria Customs Service (NCS), which has rendered the process of clearing goods at the ports comatose, with members incurring demurrage and suffering stock-out in their factories.
It deeply appreciates the assurance of the leadership of NCS that efforts are being intensified to restore effective operation of the platform. It notes that however, “the problem persists and the attendant hardship for manufacturers and other users continues to mount”.
For the record, MAN is in support of the efforts of the Government to streamline trade processes, reduce the cost of doing business at the port and enhance fiscal transparency. This, the Association argues is because it resonates with the kernel of the Association’s advocacy for a transparent, efficient and friendlier trade facilitation ecosystem that is more service-centric than revenue driven.
“We are, however, concerned that the prevailing situation is achieving the exact opposite of these progressive ideals,” it states.
Concerns/Implications for the Manufacturing Sector
For MAN, the sudden re-commencement of the 4% FOB charge made MAN to conduct a rapid technical assessment to reconfirm the concerns of manufacturers and ascertain the implications of the charge on the sector. “The outcomes show disquieting revelations that portend severe implications for the manufacturing sector. MAN is therefore constrained to list the major outcomes, which form the basis for our continued objection and appeal for a cessation of implementation of the 4% FOB Charge by the NCS,” MAN says..
Major Outcomes
- 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.
- 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.
- 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.
- 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:
- The introduction of the 4% FOB charge with its attendant consequence, as listed above, runs against the objectives of the relevant pillars of the Renewed Hope Agenda of Government, the National Development Plan 2021-2025, current industrial revolution initiatives and trade policy frameworks. All these efforts of the government seek to reduce the costs of local production, deepen domestic value chains addition and economic diversification. The reintroduction of this charge is antithetical to the expected outcomes of these laudable Government initiatives.
Associated Technical Limitations
MAN frowns at the NCS disregard for major stakeholders by not dialoguing with them on the new charge. “There was no guideline to operators or clear directives regarding the processes, procedures, cost implications and compliance requirements of the 4% FOB charge. Undoubtedly, this has generated anxiety among importers and is causing major disruptions in the supply chain of the manufacturing sector.”
MAN also argues as follows:
- 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.
- 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
In view of these stark realities and in alignment with prevailing best practices around the world, MAN strongly expresses its objection to the subtle reintroduction of the 4% FOB charge, in contravention of the earlier widely publicized suspension of the charge by the Federal Government. In addition, it implores the Federal Government and the Nigeria Customs Service to:
• Halt the implementation of the 4% FOB charge and set a timeframe ending on the 31st of December 2025 for impact assessment and inclusive stakeholders’ consultation to determine the appropriate level of charges that will guarantee the efficient performance of NCS. It argues is timeframe will just be in sync with the January 2026 take-off date for the recently introduced Tax Laws and would allow room for the convenance of a proper technical session with strategic stakeholders to discuss issues germane to the survival of affected businesses in Nigeria and the development of business-friendly implementation guidelines. MAN says the NCS should intentionally align with prevailing best practices with comparable economies and be supportive of the productive sector of the economy.
It adds that in the meantime, the NCS should retain the current 1% CISS + 7% cost of collection fee, which balances revenue generation with industrial competitiveness to save 230 million Nigerians from avoidable price escalation, and that it should stablish a well-structured engagement with relevant stakeholders, including MAN and other organized private sector groups and stakeholders, for regular dialogue on trade facilitation and customs-related issues.
The Association also advised prioritizattion of trade facilitation over revenue generation and exemplify the often voiced commitment to a thriving and buoyant manufacturing sector as a sustainable source of tax revenue for the Government, employment and wealth creation for the nation.
MAN wants government to know that “Nigerian Manufacturing sector is struggling and currently shrinking”. “Truth be told, the future of the Nigerian economy highly depends on its capacity to upscale production, improve export of manufactured products and enhance steady inflow of foreign exchange and investment. Of course, this can only be actualised if the challenges limiting the performance of the sector are frontally addressed with appropriate interventions, as no economy can achieve steady growth and sustained development without a functional and highly productive manufacturing sector,” it agues.
