Relief for importers as NCS suspends 4% FOB charge

Onome Amuge

The Nigerian Customs Service (NCS) has suspended the application of a controversial provision that imposed a four percent Free-On-Board (FOB) value on all imports, as stipulated in Section 18(1)(a) of the NCS Act 2023. The announcement comes in response to ongoing consultations with Olawale Edun, the minister of finance and other key stakeholders.

The FOB charge, a levy computed based on the value of imported goods, including transportation expenses up to the loading port, would result in higher importation costs for Nigerian importers, who are likely to pass on the additional costs to consumers, stakeholders argued.

According to them, this means that the average consumer in Nigeria would likely bear the brunt of the additional costs incurred by importers due to the FOB charge, resulting in an increase in prices for goods and services, as importers seek to recover the added expenses.

A statement issued by Abdullahi Maiwada, the NCS national public relations officer on Tuesday in Abuja, explained that the suspension of the four percent FOB valuation policy is intended to facilitate further stakeholder engagement and consultations with regard to the implementation of the NCS Act of 2023.

Maiwada noted that the timing of this suspension coincides with the expiration of the existing contract agreements with Service providers, including Webb Fontaine, which were formerly funded by the one percent Comprehensive Import Supervision Scheme (CISS). This development, the statement indicated, offers a chance for a comprehensive review and reconsideration of the Service’s revenue framework.

The NCS stated: “Under the previous funding arrangement repealed by the NCSA 2023, separating the 1% CISS and 7% cost of collection created operational inefficiencies and funding gaps in customs modernisation efforts. 

“The new Act addresses these challenges by consolidating “not less than 4% of the Free-on-Board value of imports,” designed to ensure sustainable funding for critical customs operations and modernisation initiatives. This transition period will allow the Service to optimise the management of these frameworks to serve our stakeholders and the nation’s interests better.”

The Act, according to the NCS, further empowers the service to modernise its operations through various technological innovations. 

The NCS noted further that specifically, Section 28 of the NCSA 2023 authorises developing and maintaining electronic systems for information exchange between the service, other government agencies, and traders. 

In furtherance to this, the NCS stated that it is already implementing several digital solutions, including the recently deployed B’Odogwu clearance system, which stakeholders are benefiting from through faster clearance times and improved transparency. 

Other innovative solutions authorised by the Act include; Single Window implementation (Section 33), Risk management systems (Section 32), Non-intrusive inspection equipment (Section 59) and Electronic data exchange facilities (Section 33(3)).

According to the NCS, the suspension of the FOB valuation policy will enable the service to engage in constructive consultations with relevant stakeholders to ensure that their implementation strategies align with the Act’s provisions for sustainable financing of modernisation initiatives.