The Nigerian Customs is currently prioritising the reintroduction of the suspended Free-on-Board (FOB) tariff that increased import costs for businesses in the country, to raise enough money to support operations.
Bashir Adeniyi, the Comptroller-General of the Nigeria Customs Service (NCS) threw his weight behind the controversial four percent FOB allocation during a meeting with stakeholders in Lagos on Monday, describing it as critical to overhauling Nigeria’s trade system and putting indigenous technology at the heart of port operations.
Speaking with a tone of urgency and confidence, the CG said the tariff already passed by the National Assembly and signed into law is the main artery that will fund the full transformation of Nigeria’s Customs operations, from the deployment of high-grade scanners to the seamless rollout of the e-Customs platform known as B’Odogwu.
In February, when the policy was suspended, the Service said it was migrating from service providers, including Webb Fontaine, which was previously funded through the now-repealed one per cent Comprehensive Import Supervision Scheme (CISS).
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“We were asked to hold on,” Adeniyi said. Its “reassessment” may now be coming to an end. The CG said that with the law now in effect, the Service is moving full steam ahead.
“We really don’t have a choice,” he added. “If you want to eat and lick better soup, we must be ready to fund it. Technology is not cheap,” the CG said. “As we migrate from one system to the other, we make a lot of investments in our technology. We’re talking of scanners, upgrades. We want to make BOdogwu a reference point for trade facilitation.”
He clarified that importers and clearing agents would not be subjected to any additional cost beyond the four percent FOB tariff. Once the new system kicks in, the existing one percent Comprehensive Import Supervision Scheme (CISS) will cease to apply.
“The law states that it is from the four percent FOB that everything Customs modernisation and administration will be funded,” he said.
Now that Nigeria holds the chairmanship of the World Customs Organisation (WCO) council, Adeniyi said the country must show it can run a trade facilitation system built and managed by Nigerians themselves.
“In the next two, three years, it’s going to be B’Odogwu to the world,” he said. But importers must be ready to pay the cost of seamless trade, he noted. “Technology everywhere is capital-intensive.”
The FOB charge, which is calculated based on the value of imported goods, including transportation costs up to the port of loading, is supposed to enhance Customs operations. But it also means importers will pay more to bring goods into Nigeria, a cost that will likely be passed on to consumers.
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Experts and players in Nigeria’s trade sector had raised opposition to the tariff, warning it could lead to an economic fallout.
The Manufacturers Association of Nigeria warned that if revived, the levy will significantly disrupt supply chains, trigger raw material shortages for many manufacturers, exacerbated by a weak naira used for calculating Customs duty.
They cautioned it could incur higher demurrage costs, and worsen the substantial volume of unsold inventories, diminishing competitiveness.
Adewale-Smatt Oyerinde, director general of Nigeria Employers’ Consultative Association (NECA), warned that “for industries that rely on imported raw materials, this charge will drive duty payments up by 80 per cent, significantly inflating production cost and eroding competitiveness.”
