The Manufacturers Association of Nigeria (MAN) has voiced strong opposition to the Nigeria Customs Service's (NCS) plan to re-introduce the four percent Free-On-Board (FOB) levy, warning it could lead to de-industrialization. MAN argues this levy, combined with existing economic pressures, stretches the manufacturing sector beyond its limits.

MAN Director-General, Mr. Segun Ajayi-Kadir, expressed concern that this decision was made without considering affected stakeholders, mainly manufacturers. He emphasized that the sector is already burdened, with quarterly confidence indexes showing less optimism. Ajayi-Kadir noted the contradiction of increasing burdens when global governments are promoting industrialization and domestic production.

The re-introduction of the FOB levy adds to the one percent Comprehensive Import Supervision Scheme (CISS) fee, at a time when government agencies should be reducing business costs. This is compounded by a potential 15 percent hike in port charges, increased import duty calculations, and rising energy costs. The already high cost of importation due to exchange rates will further escalate, as seen in the 118 percent jump in costs from N2.07 trillion in the first nine months of 2023 to N4.53 trillion in the same period of 2024.

MAN expects the NCS to reconsider the levy to avoid worsening the economic situation. Ajayi-Kadir calls for improved trade facilitation to mitigate challenges facing the productive sector. The FOB levy will disrupt supply chains, cause raw material shortages, increase demurrage costs, raise unsold inventories, and harm the competitiveness of Nigerian manufacturers. He points out that with headline inflation at a historic 34.8 percent, the levy will instantly impact the cost of locally produced items.

MAN also views the levy as contradictory to ongoing fiscal policies and tax reforms aimed at reducing tax burdens for households and businesses. It sees the levy as an incentive for smuggling, trade diversion, and duty under-declaration, which undermines the customs service and the country's revenue profile.

The association argues the FOB levy will jeopardize the federal government's plan to boost forex earnings through non-oil exports, as manufacturers rely on imports for essential inputs and machinery. It will also undermine Nigeria's aspiration to be an investment destination and industrial hub in West Africa.

Beyond the FOB levy, manufacturers accuse the NCS and other government agencies of prioritizing revenue collection over trade facilitation, which is their primary responsibility. Stakeholders claim these agencies focus on revenue generation rather than policies promoting trade. Dr. Obiora Madu, CEO of Multimix Group, lamented that customs and other agencies are surpassing revenue targets at the expense of business growth.

Madu highlighted that Nigerian Customs has historically been a revenue collector, neglecting its role in facilitating trade. He noted instances where incentives like the Export Expansion Grant were ignored because they didn't count as revenue for customs. This emphasis on revenue affects competitiveness and local manufacturers.

Frank Ike Onyebu, Executive Director of Universal Luggage Industries Limited, criticized the government's lack of appreciation for manufacturers and the real sector. He argued that if properly developed, the real sector could generate far more revenue than customs and other agencies. He lamented that manufacturing in Nigeria has become unattractive to investors, with many exiting or dying off.

Onyebu cited issues such as unreliable electricity supply and multiple taxes as factors working against manufacturing. He noted that the rising cost of production cannot be passed on to consumers due to low purchasing power. He concluded that the government's focus on revenue generation through numerous agencies is unsustainable for business survival.