Will Nigeria implement 4% free-on-board charge?

The Nigerian Customs Service is contemplating reintroducing a four per cent Free-on-Board (FOB) value on imports following consultations with stakeholders. Bamidele Ayemibo, CEO of 3T Impex Consulting, shared insights on Nigeria's port competitiveness and the global trade outlook in an interview with CNBC Africa. The move to reinstate the four per cent fee has raised questions about its implications on businesses and the economy at large. The Customs Service's decision has stirred discussions regarding the necessity and potential impact of the charge. Ayemibo expressed uncertainty about stakeholders' support for the measure, highlighting the imminent responses from various industry players. Ayemibo emphasized that manufacturers might be more inclined to accept the additional cost, given the current inflationary environment. He underscored the significance of the FOB charge, outlining that it would apply to the value of the goods being imported, separate from freight and insurance expenses. The anticipated levy could intensify the financial burden on businesses, especially those reliant on imported raw materials. Ayemibo illustrated the broader context of rising operational costs faced by manufacturers in Nigeria, citing the substantial expenditures incurred for power generation. In a bid to explore global trade trends and digitalization, Ayemibo shared insights from the Global Trade Review event in Lagos. The event centered on the digital transformation of trade processes, both regionally and globally. Ayemibo highlighted the disruptive impact of the COVID-19 pandemic on traditional trade practices, necessitating the shift towards digital transaction frameworks. He discussed the implementation of digital trade initiatives such as the Uniform Rule for Digital Trade Transactions endorsed by the International Chamber of Commerce (ICC). The adoption of digital trade mechanisms is poised to streamline documentation processes and enhance trade efficiency for Nigerian businesses. Ayemibo articulated the potential benefits of digitization in reducing paperwork costs and expediting transactions. He referenced Nigeria's Single Window for Trade platform and the acknowledgment from the Central Bank of Nigeria (CBN) regarding the importance of digitizing trade operations. Ayemibo stressed the overarching advantages of digitalization in curbing inefficiencies and mitigating logistical challenges within the trade ecosystem. Moreover, Ayemibo addressed concerns surrounding escalating port charges and their cumulative impact on businesses. The recent enforcement of a 15% port charge by the Nigerian Ports Authority (NPA) has compounded cost pressures on exporters and importers. Ayemibo underscored the ripple effect of multiple levies and tariffs on trade participants, signaling a growing financial strain on the sector. He urged policymakers to consider the implications of successive cost increments on inflation and overall economic stability. As Nigeria grapples with evolving trade dynamics and regulatory adjustments, stakeholders across the value chain are closely monitoring the potential ramifications of the proposed FOB charge reintroduction. The delicate balance between fostering trade competitiveness and averting economic distress remains a pivotal consideration for authorities and industry players alike. The discourse surrounding trade facilitation, digital innovation, and cost management underscores the critical imperatives shaping Nigeria's trade landscape in a rapidly changing global economy.