Customs’ 4% FOB levy will further increase inflation – Experts

Financial analysts are concerned that the country's inflation may worsen if the 4% Free-On-Board tariff on imports is implemented.

The FOB levy on imports was announced by the Nigeria Customs Service on February 5.

Abdullahi Maiwada, the service's spokesperson, stated that the levy's implementation complied with the Nigeria Customs Service Act 2023.

The NCS is imposing a 4% fee on the Free On-Board (FOB) value of imports in accordance with the terms of Section 18 (1) of NCSA 2023.

"The efficient operation of the service is driven by the FOB charge, which is determined based on the value of imported goods, including the cost of goods and transportation expenses incurred up to the port of loading."

However, Dr. Wale Adegbite, a former chairman of the Manufacturers Association of Nigeria's Ogun Chapter, and Evans Osabuohien, an economics professor, claimed that the charge would make the country's inflation rate worse.

Ogun, Adegbite, and Osabuohien of Covenant University's Department of Economics stated in separate interviews with the News Agency of Nigeria in Ota on Monday that the policy will have a detrimental effect on the economy.

The NCS's 4% levy, according to the former MAN chairman, "is a disaster and will worsen an already bad situation." with multiple devastating effects on the economy.

”Why would the government inflict more hardship on the population as this new policy will certainly lead to more price increases, thus further increasing the country’s inflation rate?

“In addition, the masses will suffer more because of the impending price increase without any corresponding increase in income.”

Also, Osabuohien said that though the new FOB policy by the NCS was meant to generate more revenue for the federal government, it would negatively impact the economy.

He said that the NCS action would increase the cost of living of households.
The economist went on to say that the move would raise the operating costs of small and medium-sized businesses, particularly those that rely on imported raw materials for their manufacturing.

"The consumers would bear the additional costs resulting from the 4% increase in FOB, which would inevitably lead to a rise in the country's inflation rate," Osabuohien stated.