Nigeria imposes 4% free on-board charge on imports

Guardian Nigeria

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00:00The cost of importing goods into Nigeria is set to rise as the Nigerian Customs Service implements a new 4%

00:07charge on the free on-board value of imports.

00:10Meanwhile, the Central Bank of Nigeria has approved the inclusion of the CFA front on the Nigeria export proceeds form,

00:17allowing exporters to repatriate proceeds in the currency.

00:20Joining me now to discuss the potential effects of these decisions on Nigeria's import and export

00:26landscape is Bamadile Ayemipo, CEO, Three Team Pax Consultant. Bamadile, thank you for joining us today.

00:33Thank you very much for having me. Well, let's start with this 4% charge.

00:40It's been criticized, especially by the, just written a comment from the Lagos Chamber of Commerce and Industry,

00:46which has described it as quite abrupt and it has happened without any

00:51sensitization or structured sensitization

00:54efforts on the part of the Nigerian Customs Service. What are your thoughts on this charge?

01:00Very much in line, I mean, at this time where inflation is on the high side,

01:06cost of living crisis is hitting us in Nigeria.

01:09We are an import-dependent nation. We have to import a lot of things we have to use and at the same time

01:15we are having a 4% increase. 4% is a lot, actually.

01:19FOB price and custom sales for efficiency. I think, for me, I just think it's very insensitive

01:26considering the fact that an average business person is going to pass that cost down to everybody who is going to buy the product.

01:33So if I'm going to bring the inflation down, this is another thing we should be seeing at this time.

01:38Now, the Nigerian Customs Service has long been criticized as just

01:42being a revenue-generating agency or body and not a trade facilitator.

01:47Do you think that that is where the problem is? The focus is the problem?

01:55Yes, and it was interesting that the new CG said they would be a trade facilitation agency,

02:00which we expect them to be, but it looks as if they are trying to also...

02:04I was thinking that, look, there is comprehensive import supervision scheme. I think that's about 1%.

02:10I'm wondering why you are bringing additional costs to this.

02:13Because it looks like, really, you want to generate more revenue rather than facilitating trade and ensuring that

02:19trade transactions go very smoothly in Nigeria. So I think it's ill-timed, actually.

02:23For whatever reason, as is being given for this, I think there are other ways to go about this and reduce the cost.

02:28Because at the end of the day, we are going to pass this burden down to the consumer,

02:32and it's going to affect us, considering the fact that we are import-dependent.

02:36Just to mention here that, obviously, you've seen in the news that

02:40customs target for 2025 has been increased from 6.5 trillion to 12 trillion.

02:47So I guess there's also pressure on the customs service itself to bring in those funds.

02:54But let's talk about this other development with the Central Bank of Nigeria

02:57approving the CFA fund to be captured on the Nigerian export proceeds for the repatriation of export proceeds.

03:04What does this do for our exporters, and how significant is this?

03:09OK, let me make a comment on the last thing you said.

03:12Giving customs a target, for me, is a misnomer, actually.

03:16I mean, the amount of customs we make is dependent on imports that come in.

03:21So giving customs a target presupposes that some people are diverting the fund

03:25and we now want the fund to come to national cover, because it looks like it's a misnomer for me.

03:29But like you said, let's move on to the other conversation.

03:32Now, the CFA initiative, NAPC, said they were proponents of it

03:38and they've graciously, as CBN has approved, a good development

03:42to be able to get a lot of informal trade within West Africa to come in.

03:47But I don't see it as impacting a lot on FX rates in terms of value of Naira.

03:52But we might be able to see more increasing volume of export in Nigeria

04:00as a result of getting additional data into the total export volume.

04:06That's what I see happening. So I think it's a welcome development,

04:09even though, of course, there are people giving different opinions about it.

04:11But in my opinion, I've done trade in West Africa before

04:14and I know how difficult it is to get payment.

04:15I think it's a good development.

04:17Right, and I wanted you to also comment.

04:19I mean, speaking about trade volumes, the export volumes,

04:22the Nigeria Export Promotion Council is running a campaign titled

04:26Go Global, Go for Certification,

04:29a scheme where they're certifying about 400 or so SMEs

04:35to get them international certification

04:38and allowing them to access niche markets, according to the NAPC.

04:43What do you think about this scheme?

04:45And according to NAPC, over 800 SMEs will be certified under this initiative.

04:53Good initiative.

04:54What I'm not sure of is if it's going to help us to get the volume we're looking at.

04:58Remember, we need a lot of efforts coming into Nigeria.

05:01I feel we should do both.

05:02While we are supporting SMEs on one hand to be able to bring in the export

05:06without quality issue, we should also look at product that is giving us the volume

05:11and concentrate on it, like the last week I said, Akinlawie,

05:14about the fact that we need to increase the volume of product

05:19that will give us the volume we need to be able to increase efforts rate

05:23and reduce pressure on Nigeria.

05:27So I think we need to do both.

05:28While we are dealing with SMEs and supporting them on one hand,

05:31we should also have a strategy to drive up the volume

05:34by ensuring that the product that is giving us the numbers

05:37are giving the right support.

05:38Right. I mean, in that same vein, what would you recommend

05:41in terms of a starting point for us to boost those volumes?

05:46Let me give you a good example, Esther.

05:49Out of all the export products from Nigeria,

05:52soya beans demand is more than all the other products put together.

05:55Soya beans demand in the world is over 90 billion.

05:58China is the largest importer of soya beans, about 60% of global demand.

06:03Nigeria can form an alliance agreement with China

06:07and we support farmers to farm heavily soya beans.

06:11Soya beans are an edible crop.

06:13We can do two or three cycles in a year.

06:15And we can, with this, with agreement with China,

06:17massively export soya beans.

06:19And even if it's $5 billion, $10 billion,

06:22in addition to whatever it is that has been done,

06:24we will be able to drive up the volume of export proceeds.

06:27And at the end of the day, increase the value of Naira

06:32because of the pressure that will be relieved on Naira if we go this...

06:35And there are so many other products that can go in this direction

06:37that we can decide to focus on supporting all the initiatives required

06:41to increase the volume,

06:42having strategic partners with countries that will take it all from us.

06:46All right, we'll leave it there.

06:47Thank you, Bamdile, for that perspective.

06:49We appreciate your contribution on the show today.

06:51Bamdile Ayemibo, CEO of 3T Impacts Consulted.

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