Market News

By Arinze Nwafor

The Manufacturers Association of Nigeria has warned that the country risks weakening its industries if the Nigeria Customs Service reintroduces the suspended four per cent Free-on-Board levy.

Director-General of MAN, Segun Ajayi-Kadir, in a statement on Monday, said the levy would “inflict catastrophic consequences” on the already fragile manufacturing sector and undermine national industrial goals.

Ajayi-Kadir warned, “The (four per cent) levy will jeopardise our aspiration to be an investment destination of choice and an industrial hub in the West African sub-region.

De-industrialisation stares us in the face.”

He lamented that the NCS failed to keep its promise of wide-ranging consultation with stakeholders, especially manufacturers, before deciding on the policy.

“We didn’t expect to read in the pages of newspapers that the levy will be reintroduced, even before the promised wide consultation with stakeholders like MAN and other private sector organisations,” the association’s DG asserted. “We admonish that the decision should be put away before it worsens and degenerates into an economic quagmire.”

MAN had earlier described the planned FOB hike as “retrogressive” and said it contradicted the current fiscal policy reform agenda of the Federal Government, which seeks to streamline levies and reduce the cost of doing business.

“This is the time for all government institutions to recommit to the reduction of the cost of doing business, expanding the scope of businesses, and incentivising new entrants in the face of high business mortality,” Ajayi-Kadir added.

He warned that the reintroduction of the levy, in addition to the existing 1 per cent Comprehensive Import Supervision Scheme charge, would deepen inflationary pressures and force more local firms to shut down.

“This is coming at a time when there is still a looming danger of the unwarranted 15 per cent hike in port charges; our members are struggling with the astronomical increase in the effective import duty calculation rate and contending with an unprecedented rise in the cost of energy,” he said.

MAN listed a range of negative implications the levy could cause, including a surge in import costs, disruptions in supply chains, raw material shortages, increased demurrage charges, and a further accumulation of unsold inventories.

“It will jeopardise the plan of the Federal Government to boost forex earnings through non-oil export, as many manufacturing exporters rely on imports for vital inputs and machines that are not available locally,” the DG submitted.

He also noted that the cost of importation had already jumped by over 118 per cent, from N2.07tn in the first nine months of 2023 to N4.53tn in the same period of 2024.

The association stressed that imposing the 4 per cent FOB levy at a time when inflation recently peaked at a 30-year high of 34.8 per cent (before rebasing to the March 2025 rate of 24.23 per cent) would further squeeze household incomes and drive up the prices of locally produced goods.

Ajayi-Kadir said, “The levy is an additional incentive to smuggling, trade diversion, under-declaration of duty, and other trade infractions that have bedevilled our country.”

He urged the Federal Government to direct the NCS to “jettison the idea entirely” and instead adopt measures that ease trade and support productivity.

“The Nigerian manufacturing sector is increasingly being burdened beyond its well-known resilience thresholds,” MAN’s DG warned.”

He concluded by calling on the government to align with global trends where countries are actively promoting industrialisation and protecting domestic production.