The Nigerian federal government’s decision to increase the Comprehensive Import Supervision Scheme (CISS) levy from 1% to 4% has sparked mixed reactions from stakeholders in the maritime industry. This increase, effective as of Tuesday, signifies a 300% jump in the levy, which directly impacts the cost of clearing goods at the nation’s seaports. The CISS serves as a primary funding mechanism for the Nigeria Customs Service (NCS) to execute its modernization projects, making it a crucial element of the agency’s operational budget. While the government hasn’t extensively elaborated on the rationale behind the sharp increase, the timing coincides with broader economic policy shifts under the new administration, potentially indicating a drive to bolster revenue generation.
The sudden implementation of the CISS increase has taken many freight forwarders by surprise. Representatives from key industry associations, such as the National Association of Government Approved Freight Forwarders (NAGAFF) and the Association of Nigerian Licensed Customs Agents (ANLCA), have voiced concerns about the lack of prior consultation and the potential impact on businesses. Nnadi Ukochukwu, the Deputy National President of NAGAFF, characterized the move as a quintessential aspect of the current administration’s economic policy, emphasizing a pattern of increased taxation. He highlighted the substantial financial burden the increase places on businesses, using the example of a typical payment quadrupling from N1000 to N4000, and highlighted the need for a comprehensive assessment of its effects. While echoing the concerns about the financial burden, Ukochukwu acknowledged that NAGAFF would conduct a thorough review before issuing an official statement.
The ANLCA, another major player in the freight forwarding sector, has also responded to the development. Emenike Nwokeoji, the National President of ANLCA, clarified that the association was not actively protesting the increment, but emphasized the need for greater transparency and communication from the government. While acknowledging the legal basis for the increase, as stipulated in the Nigeria Customs Service Act 2023, Nwokeoji stressed the importance of stakeholder engagement and sensitization before implementing such significant changes. He indicated that the ANLCA’s National Executive Committee (NECOM) would convene to deliberate on the matter and formulate a cohesive response to the new CISS levy. This call for dialogue underscores the importance of collaboration between government agencies and industry stakeholders to ensure the smooth implementation of policy changes.
The implications of the CISS increase extend beyond the immediate financial burden on importers and freight forwarders. The higher levy could contribute to increased prices of imported goods, impacting consumers and potentially fueling inflationary pressures. Additionally, the lack of extensive consultation before the implementation has raised concerns about transparency and stakeholder engagement in policy-making processes. This lack of communication can erode trust between government agencies and businesses, which is crucial for fostering a conducive business environment. Furthermore, the sudden implementation may pose challenges to businesses in adjusting their budgets and operations to accommodate the increased costs.
Addressing these concerns necessitates a multi-faceted approach. The government should prioritize transparent communication with stakeholders, outlining the rationale behind the CISS increase and its intended uses. Open dialogue can help foster understanding and collaboration, mitigating potential friction. Additionally, consideration should be given to phased implementation or other mechanisms to ease the burden on businesses, especially Small and Medium Enterprises (SMEs) that may be particularly vulnerable to sharp cost increases. A thorough impact assessment of the CISS increase is essential to understand its ramifications on various sectors of the economy. This assessment should inform potential mitigation strategies to minimize negative consequences and ensure that the increased revenue generated is effectively utilized for its intended purpose: modernizing the NCS and improving trade facilitation.
The modernization of the NCS is a laudable goal, as an efficient and modern customs service is vital for promoting trade and economic growth. However, achieving this objective should not come at the undue expense of businesses and consumers. A balanced approach that considers the interests of all stakeholders is crucial for fostering sustainable economic development. The government should ensure that the increased revenue from the CISS is strategically invested in modernization projects that demonstrably improve efficiency, transparency, and ease of doing business at the ports. This includes investing in technology upgrades, streamlining procedures, and enhancing the capacity of customs officials. By demonstrating a commitment to these improvements, the government can build confidence among stakeholders and ensure that the increased costs are justified by tangible benefits.
