Manufacturers Reject 4% FOB, Warn Against Rising Inflation, Economic Strain

•Say move counter-productive, we must tax fruits, not seeds

Emma Okonji and Agnes Ekebuike

The recent decision by the Nigeria Customs Service to implement a four per cent Free-on-Board (FOB) charge on imports has drawn criticism from Manufacturers Association of Nigeria (MAN), which warned that the move will further drive inflation and cripple the country’s industrial competitiveness.
Director-General of MAN, Segun Ajayi-Kadir, gave the warning yesterday during an interview on the “Morning Show”, on ARISE News Channels, the broadcast arm of THISDAY Newspapers.
Ajayi-Kadir rejected the new levy, urging the federal government to suspend its implementation and revert to the previous one per cent Comprehensive Import Supervision Scheme (CISS) plus the seven per cent collection fee structure.
According to Ajayi-Kadir, “This four per cent FOB is not just uncompetitive, it’s unsustainable. Comparably, West African economies like Ghana and Senegal charge between 0.5 per cent and one per cent. Pushing Nigeria to four per cent will reduce capacity utilisation, and escalate production costs, that will ultimately be passed down to consumers.”
He stated that the customs service had already exceeded its 2024 revenue targets under the old regime, questioning the rationale behind the new levy.
He said, “Government revenue should not come at the cost of production. We must tax fruits, not seeds.”
Ajayi-Kadir said the move was counterproductive to the administration’s goal of boosting local manufacturing.
He emphasised that the decision would undermine recent economic gains, including improved investor confidence and a modest drop in inflation to 21.88 per cent.
He cautioned that increasing the financial burden on manufacturers now could reverse the fragile recovery and stall job creation, innovation, and competitiveness.
Responding to questions on international best practices, Ajayi-Kadir acknowledged that Incoterms, like FOB and CIF, were globally recognised, but stressed that each country retained the discretion to adapt them to local realities.
“International standards must still align with national economic priorities,” he said.
He also highlighted the persistent challenges at Nigeria’s ports, including long turnaround times and excessive demurrage.
“It currently costs more to transport a container from Apapa to Agbara than from Singapore to Lagos,” he said, citing the ongoing glitches in the new BIODOGO customs processing system.
Calling for urgent stakeholder engagement, MAN requested a review period until January 2026, ahead of the implementation of four new tax bills.
“Let’s not snuff out the light at the end of the tunnel,” Ajayi-Kadir warned.