The Nigerian Customs Service (NCS) recently implemented a four per cent increase in charges on all imports, sparking outrage among manufacturers, economists, and various stakeholders. This move has raised concerns about its potential to exacerbate inflation and deepen the financial crisis faced by Nigerians. The Comprehensive Import Supervision Scheme (CISS) saw the charge rise from 1 per cent to 4 per cent at the close of work last week Monday, leading to widespread disapproval.
The implementation of the CISS at the Tin-Can Island Port last week Tuesday has generated significant concerns among stakeholders, who fear that the hike will have a detrimental impact on the cost of doing business at the nation’s seaports. The CISS serves as a crucial funding pool for the NCS to support its modernization projects and is considered an administrative charge in accordance with the Nigeria Customs Service Act (NCSA) 2023.
Manufacturers and importers are particularly concerned about the additional burden imposed by the increment, which comes on top of a plethora of existing import charges. In addition to the 4% charge on the Free On-Board (FOB) value of imports, importers are required to pay statutory import duties on specific items, ranging from 5% to 35%, based on the Harmonised Commodity and Coding System (HS code). Moreover, the Nigeria Ports Authority (NPA) recently implemented a 15% increase in tariff, further complicating the financial landscape for businesses.
Dr. Eugene Nweke, a prominent figure in the freight forwarding industry, highlighted the multitude of taxes and charges faced by cargoes exiting the seaports. He emphasized the detrimental impact of these charges on the economy, noting that they do not contribute value to the port system but rather serve to stifle economic growth. With fees like the N100,000 Electronic Call-Up System ETO fee per truck at the terminal, the financial burden on businesses continues to mount.
George Onafowokan, Chairman of the Ogun State chapter of the Manufacturers Association of Nigeria (MAN), strongly criticized the 4 per cent FOB charge, labeling it as “ill-conceived.” He underscored the potential for the charge to fuel inflation and erode the economic stability achieved in recent years, urging the immediate suspension of its implementation. Onafowokan emphasized the adverse effects of the charge on the cost of raw materials and goods, warning that it would ultimately be passed on to consumers, exacerbating inflation further.
Professor Sheriffdeen Tella, an expert in economics, echoed the calls for the suspension of the policy, citing concerns about the escalating cost of goods and the impact on production costs. He emphasized the need to address the high cost of production and avoid further inflating consumer prices. Senator Bukola Saraki also criticized the increment, questioning its rationale and warning that importers would transfer the costs to consumers, adding strain to struggling households.
In response to the growing backlash, the NCS defended the 4 per cent FOB charge, citing its alignment with the Nigeria Customs Service Act (NCSA) 2023. The Service emphasized that the charge is essential for driving its operational efficiency and modernization efforts. Acknowledging the concerns raised by stakeholders, the NCS assured the public of ongoing consultations with the Federal Ministry of Finance to address the grievances and ensure a balanced approach to import charges.
As the debate over the new import levy unfolds, it remains a contentious issue that has divided opinions among stakeholders. While the NCS maintains that the charge is necessary for its operational sustainability, critics argue that it will only serve to exacerbate inflation and financial burdens on businesses and consumers. The outcome of the ongoing consultations between the NCS and relevant authorities will determine the fate of the import levy and its implications for the Nigerian economy.
