“MAN Urges Policy Rethink as 4% FOB Levy Threatens Jobs and Industrial Growth”

The reintroduction of a 4% Free-On-Board (FOB) levy on imports by the Nigeria Customs Service (NCS), effective August 4, 2025, has sparked uproar among industrial stakeholders. The Manufacturers Association of Nigeria (MAN) has described the policy as “inflationary, ill-timed, and development-hostile,” warning that it could further cripple Nigeria’s already fragile industrial sector.

Policy Reversal Sparks Alarm

Until now, importers operated under a regime of 1% Comprehensive Import Supervision Scheme (CISS) levy and a 7% cost of collection fee. The government scrapped these in favor of a single 4% FOB charge, a move that manufacturers say shifts the cost burden disproportionately onto industries that rely on imported inputs.

“This came as a surprise,” said Segun Ajayi-Kadir, mni, Director-General of MAN.
“The Federal Government had earlier suspended this charge after stakeholders, including MAN, strongly condemned it. Its reintroduction at this time will worsen production costs, fuel inflation, and discourage investment.”

Flashback: Why It Was Suspended

The FOB levy first surfaced in 2023, sparking nationwide backlash. Critics pointed out that the charge would erode competitiveness, increase the cost of raw materials and machinery, and discourage legitimate trade. After weeks of lobbying, the Federal Government suspended the policy, promising a more stakeholder-friendly framework.

Two years later, the reintroduction, without broad consultation, has reignited old concerns.

Recurring Flip-Flops: A Timeline of Levy Controversies

Nigeria’s trade and import levy regimes have been marked by policy inconsistency, leaving businesses uncertain and investors wary:

• 2005 – Banking Recapitalisation vs. Trade Charges: Manufacturers faced steep import levies alongside bank recapitalisation reforms, sparking debates about whether trade costs undermined industrial growth.
• 2011 – Introduction of Destination Inspection Fees: The NCS introduced new inspection and collection charges, drawing protests from manufacturers who said it increased port costs.
• 2019 – Attempted Levy Harmonisation: Government sought to merge inspection and collection fees but abandoned the plan after backlash from private sector groups.
• 2020 – Court Cases Over Levy Legality: Legal challenges emerged over multiple overlapping import levies, leading to temporary relief for some industries.
• 2023 – First Introduction of 4% FOB Charge: Suspended after widespread opposition from MAN, LCCI, and trade experts who warned it would escalate inflation and discourage investment.
• 2025 – Reintroduction of 4% FOB Charge: Despite earlier suspension, Customs announced a fresh implementation without clear guidelines or stakeholder consensus, reigniting tensions.

This pattern of “introduce, suspend, and reintroduce” has created an atmosphere of policy unpredictability that analysts say hurts Nigeria’s competitiveness and deters foreign direct investment.

Mounting Headwinds for Industry

Manufacturers are already grappling with:

• High exchange rate: Naira at ₦1,540/$.
• Alternative energy costs: Over ₦1.1 trillion in 2024.
• Rising borrowing costs: Interest rates above 35%.
• Port inefficiencies: Customs’ B’Odogwu platform glitches causing demurrage and cargo delays.

Ajayi-Kadir noted that many factories are now facing stock-outs because imported inputs are trapped at ports, further threatening production continuity.

Economic Implications: MAN’s Findings

A technical assessment by MAN revealed troubling outcomes of the 4% levy:

• Higher costs than before: Unlike the old 1% + 7% system, the new 4% is applied on the entire import value. For high-value machinery and raw materials, this is significantly costlier.
• Inflationary spiral: Import costs, already ₦6.6 trillion in 2024, will climb further. These costs will be passed to consumers, worsening inflation already at 21.88% (July 2025).
• Regional disadvantage: West African peers like Ghana, Côte d’Ivoire, and Senegal charge between 0.5%–1% FOB on essential imports, focusing higher fees only on luxury items. Nigeria’s blanket 4% risks cargo diversion and smuggling.
• Policy contradiction: The charge undermines the Renewed Hope Agenda, National Development Plan (2021–2025), and industrialization strategies that aim to lower production costs.

Expert Commentary

Economists and trade analysts have also weighed in:

• Prof. Pat Utomi, Political Economist:
  “Nigeria is in a cost-of-living crisis. Any policy that directly raises import costs will transmit into higher consumer prices. What government gains in short-term revenue, it loses in long-term competitiveness and jobs.”
• Dr. Muda Yusuf, CEO, Centre for the Promotion of Private Enterprise (CPPE):
  “We need a customs regime that facilitates trade, not one that stifles it. A blanket 4% levy across all imports disregards the nuances of productive inputs versus luxury goods. This is a blunt instrument in a delicate economy.”
• LCCI Trade Group:
  “With inflation above 21% and households under strain, this policy risks social backlash. Government must strike a balance between revenue and economic survival.”

MAN’s Recommendations

To avert industrial collapse, MAN urged the Federal Government and Customs to:

1. Suspend the 4% FOB levy until December 31, 2025, allowing time for impact studies and stakeholder consultations.
2. Retain the 1% CISS + 7% cost structure, which ensures revenue without crippling manufacturers.
3. Prioritize trade facilitation over revenue, aligning customs policies with industrial growth and competitiveness.
4. Create a structured stakeholder engagement platform for regular dialogue on trade issues.

Reflection: The Bigger Picture

The battle over the FOB levy underscores a deeper question: Is Nigeria’s trade policy revenue-driven or industry-driven?

At a time when government is pushing for diversification and industrialization, experts say the Customs’ approach sends the wrong signal. Instead of encouraging local production and exports, the levy may accelerate factory closures, job losses, and capital flight.

Ajayi-Kadir captured the sentiment:
“The truth is, the future of Nigeria’s economy depends on scaling up production, boosting exports, and attracting investment. No economy can thrive without a strong manufacturing base. This levy pushes us in the opposite direction.”

As Nigeria battles inflation, foreign exchange scarcity, and shrinking industrial output, the 4% FOB charge risks becoming a policy misstep with lasting consequences.

The decision now lies with the Federal Government: Will it prioritize immediate customs revenue, or safeguard the long-term survival of its manufacturing backbone, the sector that employs millions and holds the key to sustainable growth?