The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, has lamented that unfriendly government policies and the actions of the Nigeria Customs Service (NCS) are undermining efforts to reduce the high operational cost facing local manufacturers.
Speaking during a television programme yesterday, Ajayi-Kadir urged the Federal Government to immediately direct NCS to permanently suspend the four per cent free-on-board (FOB) charge on imports, warning that the levy would significantly increase production costs and undermine the country’s manufacturing competitiveness.
He warned that the new charge puts Nigeria at a disadvantage compared to other West African countries, where similar charges range between 0.5 and one per cent.
“In Senegal, Ghana and Côte d’Ivoire, FOB is between 0.5 and one per cent. Taking ours to four per cent far outclasses the one per cent CIS and the seven per cent cost of collection the NCS previously took,” he stated.
Questioning the rationale behind the increase, Ajayi-Kadir pointed out that the NCS had already exceeded its revenue targets in 2024 under the previous fee structure.
“When Customs was collecting the one per cent CIS and seven per cent cost of collection, it was able to exceed its target for 2024. So, there is really no need for increased earnings by Customs,” he argued.
The MAN DG warned that the new policy could undermine recent economic stability gains and worsen inflation, which the government worked hard to reduce to 21.88 per cent.
“This introduction is going to escalate costs, drive up inflation and reduce our competitiveness because we compete against other countries in terms of what we import. We call for the suspension of the four per cent FOB and a reversal to the one per cent CIS and seven per cent cost of collection, while customs engage in a conversation with stakeholders,” he stated.
He stressed the need for proper consultation before implementing such policies, arguing that revenue generation should focus on expanding the tax base rather than increasing the burden on existing taxpayers.
He also lamented the sector’s low contribution to Nigeria’s gross domestic product (GDP), currently standing at less than nine per cent compared to 15-20 per cent in other economies.
He warned that increasing production costs would further reduce the sector’s capacity utilisation and profitability, ultimately affecting government revenue.
