Experts: Customs’ 4% FOB levy will further increase inflation

Financial experts have raised alarm that the implementation of the four per cent Free-On-Board levy on imports would exacerbate inflation in the country.

 

The Nigeria Customs Service on February 5 announced its introduction of the FOB levy on imports.

 

According to the spokesman of the service, Abdullahi Maiwada, the introduction of the levy was in line with the provisions of the Nigeria Customs Service Act 2023.

 

“In line with the provisions of Section 18 (1) of NCSA 2023, the NCS is implementing a 4 per cent charge on the Free On-Board (FOB) value of imports.

 

“The FOB charge, which is calculated based on the value of imported goods, including the cost of goods and transportation expenses incurred up to the port of loading, is essential to driving the effective operation of the service.”

 

However, a former Chairman, Manufacturers Association of Nigeria, Ogun Chapter, Dr Wale Adegbite and Evans Osabuohien, a Professor of Economics, said that the levy would worsen the nation’s inflation rate.

 

In separate interviews with the News Agency of Nigeria on Monday in Ota, Ogun, Adegbite and Osabuohien of the Department of Economics, Covenant University, said that the policy would negatively impact the economy.

 

The former MAN chairman said that the 4 per cent levy by the NCS “is a disaster and will worsen an already bad situation with multiple devastating effects on the economy.

 

”Why would the government inflict more hardship on the population as this new policy will certainly lead to more price increases, thus further increasing the country’s inflation rate?

 

“In addition, the masses will suffer more because of the impending price increase without any corresponding increase in income.”

 

Also, Osabuohien said that though the new FOB policy by the NCS was meant to generate more revenue for the federal government, it would negatively impact the economy.

 

He said that the NCS action would increase the cost of living of households.

 

The economist explained further that the development would increase the cost of operations of Small and Medium Enterprises, especially those companies that depend on imported raw materials for their production.

 

“This additional cost to be incurred through the 4 per cent increase in FOB would be transferred to the consumers and it would automatically trigger an increase in the nation’s inflation rate,” Osabuohien said.

 

 

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