The Chairman of the Organised Private Sector of Nigeria, Dele Oye, has called on the federal government to either suspend the implementation of the Free On-Board valuation on imports by the Nigeria Customs Service or exempt businesses involved in production and manufacturing from the policy.
On Wednesday, NCS Spokesperson Abdullahi Maiwada announced in a statement that the NCS was to begin implementing a four per cent charge on the Free On-Board value of imports.
Oye, who is also the President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, said the recently announced implementation of the charge would place an additional burden on industries that are yet to recover from recent economic reforms.
He made this position known on Thursday in a live interview.
“We are just coming out of reforms, and industries have not fully recovered,” he said.
“I would appeal that they either suspend that (FOB charge) now or at least let it focus on people who are buying luxury goods. Anybody interested in production or wanting to use it for raw materials should not be saddled with that four per cent (charge).”
According to the OPSN chairman, the FOB charge was previously pegged at one per cent but was increased to four per cent under the 2023 Customs Act. He warned that enforcing the policy on manufacturers would increase the cost of production, contradicting President Bola Tinubu’s directive to reduce inflation to 15 per cent.
He argued, “There should not be an additional cost to the cost of production. After all, the president has said we should drive at 15 per cent to reduce inflation. If we were to get to that level, then the public sector and government should support industries by not imposing more taxes. For all we know, companies do not pay tax; they pass it to the consumers.”
Mr. Oye further stated that taxation is not the way to drive productivity, but rather, the government should focus on reasonable regulation, single-digit loans, and increased stakeholder engagement.
He maintained, “The best way to get out of where we are is not to impose more sanctions but to create an environment where investment can flow freely. You have to make Nigeria more competitive than its neighbours and make it a destination for business. Look at Dubai; everybody is going there, and look at how everybody is leaving London because of taxes.”
Sharing his thoughts on the 2024 budget, Oye expressed concerns about the growing fiscal deficit, stating that the government’s recent increase of N4.5tn to the budget was worrisome. However, he welcomed reports that the funds would be used to support the Bank of Agriculture and the Bank of Industry.
“This is one of what we have been crying for in the private sector, the NACCIMA president asserted. “Those institutions should be properly funded so that we can have reasonable single-digit loans to support the productive sector.”
He also called on the Central Bank of Nigeria to reduce the monetary policy rate and ensure that public-sector borrowing is capped to free up more funds for private investment.
“If this public administration pays back the loan it is currently owing, the interbank rate will fall, and naturally, the interest rate will fall with the CBN’s support,” he added. “We are asking for reasonably priced loans, and this economy will move.”
Further, Oye urged the government to finalise resolutions on the tax bill, highlighting the importance of making Free Trade Zones competitive with other countries such as Ghana.
He explained, “FTZs are major catalysts for growth. If we make them as competitive as our neighbouring countries, then it is another easy way to grow the economy because they are a worldwide club and can move industries easily from any part to Nigeria.”
He underscored the need for increased engagement with stakeholders before implementing major economic policies, stressing that a collaborative approach would help the government achieve its goal of economic growth and stability.
