Mr. Babatunde Mukaila Abdulaziz.
Story by Dili Utomi.
The recently re-introduced 4% tarrif on free on board (FOB) on imported cargoes is causing Freight Forwarders and Licensed Customs Agents as well as their clients, the importers a great deal of distress.
The free on board (FOB) is simply an international shipping term that indicates when ownership and responsibility for goods transfer from seller to buyer. It is commonly used in sea and inland waterway transportation.
Essentially, it defines at what point the seller’s responsibility for the goods ends and the buyer’s responsibility begins during the shipping process.
The reason for an anticipated storm is that for one, the introduction of the 4% FOB charge into the Customs and Excise Management Act (CEMA) 2023 is said by most stakeholders to be a matter not discussed, but which was smuggled into the Act by some unknown forces and successfully passed into law.
To the fair minded, the question arises about whether these stakeholders were not around to make input before this portion of CEMA 2023 was passed into law.
The stakeholders argue that though, they were around to make input before the Act became Law, but that there was no mention of any 4% charge on FOB in the course of the national assembly gathering information from them and others, preparatory to making the Act into Law.
It beggars belief then that a piece of legislation that is so crucial to trade and commerce generally can be subjected to such triviality if the stakeholders are to be believed. It is even more so as the implementation was initially stalled earlier in the year, but has now seen the light of the day with the attendant economic connsequences.
We sought the opinion of a Licensed Customs Agents and the immediate past general secretary of the Association of Nigerian Licensed Customs Agents (ANCLA) Mr. Babatunde Mukaila Abdulaziz.
Mr. Abdulaziz who has over thirty years of experience in the logistics supply chain business did not hide his opinion about “the manner with which the 4 percent FOB was smuggled into the CEMA of 2023”.
Mr. Abdulaziz is miffed that the NCS is piling up various charges on imported goods. He lamented that for starters, there is the normal Comprehensive Import Supervision Scheme (CISS) fee which attracts 1% of the total FOB value of the cargo as well as other statutory tarrifs in place.
He added that the 7% Port Development fee is still subsisting and that most government agencies that operate at the Ports including the Nigeria Customs Service share from this particular charge .
Mr. Abdulaziz noted that the 0.5% ECOWAS Trade Liberalisation Scheme (ETLS) for goods coming in from outside the ECOWAS areas is also charged on the imported goods.
He asserted that aside these mentioned charges, the basic, static tariffs of 5%, 10%, 20%, 30%, 35% on goods depending on their classification and value are also charged on these cargoes.
Mr. Abdulaziz clarifies that the Nigeria Customs Service does present and defend a budget on yearly basis for its salary and other maintenance costs and wonders why the 4% FOB fee which is also meant for the same NCS is being implemented.
The Nigeria Customs Service is statutorily bound to collect revenue from 5 basic areas which include the Customs duty, the value added tax, inspection fee, documentation fee and the Port and handling charges and it is also statutory that the NCS receives a part of one of the charges for recurrent purposes.
It is therefore ‘intruiguing’ from the point of view of the stakeholders that another type of fee is charged for the same government agency and for the purpose which has already been statutorily captured in another area where a charge has already been fixed.
Another area where the operators in the logistics supply chain especially the freight forwarders and licensed Customs agents have grouse with the government is the proposed hike in licensing fees.
There are good indications that the Nigeria Customs Service has proposed to increase the cost of issuing licences to freight forwarders and licensed Customs agents to the tune of ₦10m from the previous rate of ₦515,000.00, bonded terminals rate increases from ₦60,000 to ₦20m and ship Chandlers from ₦515,000 to ₦2m
The renewal fees for the licences of freight forwarders and licensed Customs agents will rise from N215,000 to ₦4 million, while the freight forwarders will also need to obtain ₦20m bank bond annually as a guaranty to operate their licences.
Mr. Abdulaziz sees “these gargantuan increases as exploitative, unjustifiable and impracticable”, he noted that these increases should not be allowed to see the light of day as Customs brokers are going to fight the part that concerns them the most.
The introduction of the new FOB tarrif and the increase in licencing fees are posing great burden for the operators in the industry, but the management of the Nigeria Customs Service seem determined to make the implementation of the new rates reality .
The collection of the 4% tariff on FOB commenced about two weeks ago while the collection of the increased licencing fees start from January of 2026.
Activities at the nation’s Ports may witness a lull owing to the various charges especially the newly implemented 4% FOB charge.
As the freight forwarders and licensed Customs agents appear for a showdown against the government, the nation may witness a temporary economic setback unless of course a middle of the road kind of solution is found.
The full interview with Mr. Abdulaziz will be featured on the Maritime Frontier Show on the VOP television, Sunday the 17th of August.
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