Nigerian Federal Government

The federal government of Nigeria has suspended the implementation of a 4 per cent Free on Board (FOB) levy on imports, responding to mounting fears that the charge would further fuel inflation and weaken trade competitiveness.

In a directive sent to the Nigeria Customs Service (NCS) and signed by Raymond Omachi, Permanent Secretary (Special Duties) in the Office of the Minister of Finance and Coordinating Minister of the Economy, the ministry said the suspension took effect immediately.

“Many importers and businesses have raised concerns about the increased financial burden this levy imposes, with potential adverse effects on inflation, trade competitiveness, and the overall business climate in Nigeria,” the letter read.

A Pause for Stakeholder Engagement

The 4% FOB levy was introduced under the Nigeria Customs Service Act 2023 as part of the government’s push to boost non-oil revenue. However, import-dependent businesses and economists warned that the levy would raise import costs, worsen inflation, and undermine ongoing reforms.

Nigeria’s annual inflation stood at 20.12 per cent in August, driven by higher transport and food prices following the removal of fuel subsidies and a sharp depreciation of the naira. Businesses argued that the levy would further squeeze consumers already grappling with rising living costs.

The ministry said suspending the levy would allow for “comprehensive stakeholder engagement and a thorough review of the levy’s framework and its broader economic implications.”

Economic Balancing Act

The move underscores the administration’s challenge of raising much-needed non-oil revenues while cushioning the impact of reforms that have strained households and businesses. Officials said the government would work with the Nigeria Customs Service and other stakeholders to design a more equitable and growth-friendly revenue measure.