4% FOB levy will hurt consumers, strain household budgets – Saraki

Bukola Saraki, Nigeria’s former senate president has called on the federal government to reconsider plans to implement the 4 percent free-on-board (FOB) levy initiated by the Nigeria Customs Service (NCS).

Saraki, in a post on X Saturday criticised the development, stressing that it would add to the burden of many Nigerians who are already reeling from a cost-of-living crisis.

The former senate leader also knocked the NCS for its rising operational costs which he estimated at “over $1.5 billion annually” in a country where 129 million are living below the poverty line amid harsh economic conditions.

“Importers will inevitably pass these costs on to consumers, further straining the budgets of millions of struggling households,” Saraki said.

Read also:Prices seen rising as Customs imposes 4% FOB charge on imports

“This new fee of 4% is not even restricted to luxury goods but across all imports, so even for industries that import their raw materials whose duties are only 5%, the customs agency will now charge importers an extra 80% of the duty amount as administrative fees,” he added.

Saraki noted that with Nigeria’s annual imports estimated at N71 trillion, the new 4 percent customs administration charge on FOB value will come to N2.84 trillion.

“Does this mean that the Customs Service requires an additional N2.84 trillion annually to do its job?” he questioned, adding that the agency already has a budget and gets an incentive percentage on total customs duties collected.

Read also: LCCI calls for suspension of Customs FOB import charge

The NCS had on February 5 stated that it would begin to implement the new 4 percent FOB levy on value imports, noting that its actions are in line with the provisions of the Nigeria Customs Service Act (NCSA) 2023.

But the former Senate president is worried that the policy may stoke prices and dampen the government’s efforts in making Nigeria top investment destination in the world by improving its ease of doing business index.

“How can this make sense or support the government’s policy of promoting the ease of doing business?”