FOB Levy on Hold: Customs Moves to Suspend 4% Charge as Ports Seek Predictability
Nigeria’s import community exhaled this week as the Nigeria Customs Service (NCS) confirmed it is consulting the Ministry of Finance to suspend the four percent Fee-on-Board (FOB) levy on imports. The pause follows government direction and weeks of pushback from manufacturers, freight forwarders and terminal operators who warned the charge would spike landing costs and fuel cost-push inflation.
NCS clarified that the levy originates from Section 18(1)(a) of the NCS Act, 2023—not from a discretionary Customs circular—and said operations will continue uninterrupted while it awaits formal guidance on temporary alternatives that keep revenue flowing and cargo moving.
Why this matters for trade and inflation
- Cost stack relief: A flat 4% on FOB (invoice value before freight/insurance) would have sharply lifted total import duty outlay when combined with CET duties, VAT, excise/levies, ECOWAS fees, and surcharges—particularly painful for inputs and machinery.
- Port competitiveness: Lagos/Onne risk cargo diversion to Cotonou, Lome or Tema when Nigeria’s cost stack rises. A suspension stabilizes routing decisions and keeps liners’ port calls sticky.
- Price transmission: For FMCG and industrials, higher landed costs typically cascade to shelf prices within 4–8 weeks, raising headline inflation and eroding consumer demand.
- FX and compliance: Bigger duty bills can push importers toward under-invoicing and informal channels. A pause reduces that pressure and supports cleaner declarations.
What the suspension could look like (operationally)
- Hold on 4% FOB computation in the valuation module pending Finance Ministry guidance.
- Fallback to prevailing charges (CISS 1% + 7% cost of collection, etc.) to avoid revenue gaps and clearance bottlenecks.
- Help-desk escalation for project cargo and time-sensitive shipments to maintain service levels while rules are harmonized.
- Stakeholder loop-backs with manufacturers, customs brokers, shipping lines and terminal operators to stress-test any revised framework.
Sector impact: who wins, who waits
- Manufacturing & agro-processing: Immediate relief on inputs and spares; helps preserve margins and production schedules.
- Retail & auto: Slower pass-through to prices, supporting Q4/Q1 demand; premium categories benefit most.
- Oil & gas services, EPC: Project cargo and heavy-lift consignments avert major cost escalations; timelines stabilize.
- Government revenue: Short-term dip versus a 4% regime, partly offset by higher compliance, faster throughput, and fewer disputes.
Policy choices on the table
If government still wants a targeted revenue tool without hurting competitiveness, a calibrated mix will work better than a flat FOB levy:
- Risk-tiered fees (0.5–1% for essential inputs; higher only for luxury/non-essential goods).
- Time-bound surcharge with sunset and quarterly transparency reports.
- Throughput-for-rebate: volume or compliance rebates for AEO/low-risk importers.
- Digitized dispute resolution and predictable SLAs to cut dwell time (a bigger competitiveness lever than any levy).
- Enforcement first: close revenue leakages (valuation fraud, misclassification) before new levies.
What to watch next
- Finance Ministry circular: The definitive instrument that switches off the 4% calculation and sets interim rules.
- Customs IT updates: UCMS/valuation module change-logs—small config lags can cause big queue buildups.
- Price trackers: Import-dependent baskets (food, pharma inputs, packaging, autos) for evidence of easing pass-through.
- Cargo routing: Weekly box counts and transshipments—does traffic stick with Nigerian ports?
- Legislative follow-up: Whether the NCS Act provision is amended, narrowed, or paired with exemptions.
Quick FAQ for importers & brokers
Is the 4% FOB charge gone?
It’s paused pending formal suspension. Expect an official Finance circular and Customs implementation notice.
Do I re-price ongoing LCs?
Hold major re-pricing until the circular lands. Build two scenarios into pro-formas and advise clients accordingly.
What documents change at the desk?
None immediately. Watch for updates to the valuation worksheet, Schedule of Charges, and UCMS drop-downs.
Will this slow clearance?
Customs says no disruption. Use the designated help-desk for project cargo and tight-deadline shipments.
BRANDECONOMY Take
Suspending a uniform 4% FOB levy is the right call for trade facilitation and inflation management. Nigeria needs bigger volumes, tighter enforcement, faster ports—not blunt instruments that drive cargo away. If revenue must rise, do it with precision, predictability and performance incentives. That’s how you keep ships calling, factories running, and prices in check.
