How suspension of the FOB levy affects Nigerian importers and consumers

In the middle of 2025, Nigeria’s government introduced the 4% Free On Board (FOB) levy on imports under the Nigeria Customs Service Act 2023, aimed at reducing customs fees by substituting certain smaller levies (including cost of collection and process fees under the Comprehensive Import Supervision Scheme, CISS). The levy was vehemently opposed by importers, manufacturers, and consumer groups, citing that it would increase costs for businesses, stoke inflation, and hamper the competition of trade. The concerns that followed forced the government to suspend the FOB levy to allow for a broader consultation and review of the levy framework.

Understanding how this suspension impacts importers and consumers is crucial, as the introduction and immediate withdrawal of the levy should bring both relief and uncertainty into the trade and cost-of-living situation in Nigeria.

What was the FOB levy, and why was it suspended

The 4% FOB levy was set in the first week of August 2025 to be a unified charge, intending to replace some existing port and customs-related charges. It was to bring more transparency to import costs and unify the diverse fees that importers had to contend with. Some problems crept in:

• Importers complained that practically the FOB levy was being collected alongside the old levies, instead of them being repealed, leading to a net increase in clearing costs.
• Manufacturers argued that the new charge would increase production costs for raw materials not sourced locally, thus impairing their competitiveness. 
• Trade associations warned of inflationary pressures, suggesting the levy would push up consumer prices in a context where inflation was already high. 

Based on consultations, the government suspended the levy with immediate effect, using a directive by the Finance Ministry beginning in September 2025. This suspension was justified on the grounds of the economic burden the levy imposed upon both business and consumers, and the need to create a more equitable and efficient revenue collection system. 

How the suspension of the FOB levy affects Nigerian importers

The suspension of the FOB levy brings immediate relief, but at the same time poses some challenges for importers in terms of their planning. Here are the key ways importers are affected:

Relief in cost burden

With the suspension of the levy, the cost burden that importers had anticipated or were already considering is being reduced. For many, the levy would be seen as a big burden since it has escalated freight and clearing charges to large margins; importers perceived its additional burden to run into trillions of naira per annum. With suspension, many of those additional costs have simply gone away. 

Manufacturers particularly benefit in that many of them depend on imported raw materials, machinery, and spare parts. The levy would have placed upward pressure on cash outflows on these key inputs, so relieving the levy eases cash flow and allows for more competitive pricing and the maintenance of margins.

Improved trade competitiveness

Importers in Nigeria are competing with goods that enter the country through its neighboring states; hence, any increase in importation duties is weighted in favor of informal or parallel imports. The suspension attempts to create a level playing field and avoid cargo diversion. In addition, the lower costs of clearing benefit importers who import for re-export purposes and help enhance their competitive edge both in regional and global markets. 

Uncertainty and planning risks

One negative side is that importers made projections or budget plans predicated on the visionary scenario where the levy continues. Contracts may have been priced including FOB charge, stocks ordered, or quotes issued. So with suspension, some of those cost models would need to be reconsidered, resulting in confusion and possible renegotiation.

Some importers might have incurred some of these costs already, or priced them into their recent purchases; thus, they may not be able to reverse their already incurred or locked-in costs. 

Cashflow and margin management

With lower import costs (for now), importers can free up cash for working capital. Margins that were being pinched could be maintained. However, uncertainty means that some importers may still price risk into their operations, building in buffers for reinstatement risk or hedging their imports in other ways (e.g., against different suppliers or pre-negotiated costs). 

How the suspension of the FOB levy affects Nigerian consumers

Consumers are the major beneficiaries of the suspension, but some effects are immediate, while some take longer. Here are some of them:

Slower inflationary pressure (a short-term relief)

Perhaps the most immediate impact would have been the slow rise of prices of goods, particularly those imported or at least significantly dependent on imports (such as electronics, certain food items, vehicles, mini spare parts), which under the FOB levy were expected to rise sharply. Some price increases that were anticipated have been delayed or toned down. 

Reduced the cost of imported goods and manufactured items

An increase in the price of vehicles, imported food products, electronic gadgets, machinery, or goods used by local manufacturers, among others, is avoided due to the extra cost that the 4% FOB charge could have imposed. This means lower markups, especially if importers and retailers pass along the benefits to consumers.

For local goods whose input costs come from abroad, production costs may not be jacked up so much, which presents an opportunity for manufacturers to lower their price increases or at least not increase them as much.

Possible improvement in availability and supply chains

Because of lower import costs, importers are less likely to delay or cancel orders. Hence, the threat of high clearing and import costs would not become a factor for product availability. Further, a reduction in shipping charges, clearing, and port charges could result in fewer delays and may discourage understocking.

Psychological and consumer confidence boost

The suspension of the levy sends out a message to companies and consumers that their concerns are being listened to. This improves the morale of businesses, likely reducing the fear of a sudden price shock, and perhaps also encouraging some consumer spending as people expect more price stability.

Medium-term implications and what to watch out for

While suspension brings relief, there are also medium-term implications that one has to look out for.

• Negotiating future policy: The government has indicated consultations with stakeholders to review the issue of the levy. What is decided then will matter: whether future levies are introduced; what exemptions or thresholds are involved; and how different levies are structured. Importers need to continue engaging with shaping policies for trade competitiveness and inflationary impact.
• Cost adjustments by businesses: Retailers and manufacturers might have made plans, anticipating the levy. Hence, some price increases are likely to remain since they would not be able to revert such adjustments. Likewise, businesses with contracts based on the levy have to renegotiate arrangements.
• Exchange rate, freight, and ports efficiency: Costs of imports remain dependent even in the absence of this levy on factors such as the exchange rate, freight rates, port delays, demurrage, and inefficiencies. No improvement in these would still leave importers with high costs.
• Inflation trends and consumer price index: This suspension may only slow down the flow of further increases, while inflation from other sources, like energy and currency devaluation, will remain the major drivers of inflation and consumer prices over the medium-term forecast.

Conclusion

The suspension of the 4% FOB levy in Nigeria has come as welcome news to importers, manufacturers, and consumers. For the masses, the levy was perceived to be an added cost linked to imports and hence would raise import costs and inflation levels, and also place an additional burden upon both businesses and households at a time when economic conditions were difficult overall.

For importers, it means costs become lower with regard to clearing, increased competitiveness, and breathing space for planning and pricing. For consumers, it provides them with the possibility of making prices less volatile, keeping goods more available, and avoiding or minimizing inflationary effects due to this specific levy. The future remains unsure: how the eventual replacement or change of the levy will eventually be done, how stakeholders will be consulted, and how complementary policies (such as improved port efficiency, stable exchange rates, and management of freight costs) will be implemented will be of great importance.

Future will tell: The key is for businesses, importers, and civil society at large to monitor policy developments, engage government stakeholders, and prepare for different scenarios. The suspension may be temporary, but it gives the government an opportunity to build more predictable, fair, and trade-friendly import duty and customs charge systems that protect both revenue and economic well-being.