A recent policy introduced by the Nigeria Customs Service (NCS)—a four per cent Free On Board (FOB) valuation charge—has triggered widespread concern across Nigeria’s importation and logistics ecosystem. Importers, clearing agents, auto dealers, and freight forwarders warn of a ripple effect that could send the cost of imported vehicles and goods soaring, stifle the auto industry, and deepen the economic struggles of ordinary Nigerians.
Though intended to replace older levies and fund digital customs infrastructure, stakeholders insist the new charge, calculated on the FOB value of imports, is already compounding inflationary pressures in the market, raising vehicle clearing costs by as much as 40 per cent.
Vehicle Prices Skyrocket, Affordability Crisis Deepens
For a population still recovering from post-COVID currency shocks and record inflation, the FOB charge lands like a thunderclap. Auto dealers point out that prices of used cars—especially models popular with Nigeria’s middle class like the Toyota Corolla, Honda Civic, and Nissan Altima—have increased by as much as 350 per cent over the past three years.
A modest Nigerian-used car like a 2005 Toyota Corolla, for example, now costs around N22.7 million over five years in Lagos, factoring in purchase price, fuel, maintenance, and regulatory fees. Even after resale, it totals N18.9 million—figures that are far out of reach for most working-class Nigerians.
“Only wealthy people can now afford to buy cars. A Corolla meant to serve daily needs is becoming an unaffordable luxury,” lamented Iwayeye Olatunji, Client Services Manager at Inspired Cars.
Olatunji’s frustration reflects a broader trend: dealers are abandoning low-end vehicles in favour of luxury models, not out of preference, but out of business survival. Many argue that the profit margins on cheaper vehicles have thinned so drastically that staying afloat means catering only to Nigeria’s elite.
Policy Change Triggers Shift in Importation Patterns
The FOB levy, which took effect on August 4, 2025, was introduced under the Nigeria Customs Service Act (NCSA) 2023. The Act seeks to modernise customs operations and consolidate import-related charges, replacing the previously existing seven per cent customs surcharge and one per cent Comprehensive Import Supervision Scheme (CISS) fee.
However, while the CISS has been removed, stakeholders say the seven per cent surcharge remains active in the system—effectively doubling the burden on importers, in contradiction to earlier agreements.
According to Clinton Okoro, CEO of Globjoy Investment Ltd and a spokesperson for the African Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON), the new charge is costlier than the old regime.
“Even if they had removed the other charges completely, the four per cent FOB would still be more expensive because it is calculated differently and adds more to the final clearing cost,” he explained.
Okoro said that a car purchased abroad for $4,000 to $6,000 may now cost over N3 million to clear, while higher-end vehicles face even steeper fees. “In some cases, clearing costs exceed the purchase price. That’s why you see cars abandoned at the port.”
Ports Turn to “Ghost Towns” as Abandonment Rises
Industry players paint a grim picture of Nigeria’s port activities. According to Taiwo Fatomilola, National Public Relations Officer of the Association of Registered Freight Forwarders of Nigeria (AREFFN), the nation’s busiest ports, particularly in Lagos, are witnessing a worrying slowdown.
“With the introduction of the four per cent FOB charge and retention of the seven per cent surcharge, the ports are like ghost towns. Brand new and used vehicles are stuck as importers can’t afford the excessive clearance charges,” he said.
Fatomilola described cases where duties that previously cost N8 million now require N14 million, after accounting for the FOB addition. He accused some importers of exploiting the new regime to raise prices unjustifiably, despite still posting significant profit margins.
“They were making N15 to N20 million profit per vehicle. Now, they increase prices further and blame it on FOB, but it’s greed. If they keep going this way, the market will collapse,” he warned.
Regulatory Bodies Insist System is Robust Against Abuse
Despite the chaos, customs officials maintain that the new digital system is airtight and immune to the manipulation tactics of the past. Fatomilola noted that advanced tracking through Vehicle Identification Numbers (VINs) and digital bill of lading systems has closed loopholes used to under-declare vehicle values or disguise fully built vehicles as knockdown kits.
“The system is advanced now. You declare a 17-digit chassis number, and the Customs can verify the vehicle’s full history. There’s no escaping the duty,” he said.
Stakeholders Caution Against Economic Fallout
The long-term implications of the policy may be more than just financial. Eugene Nweke, Secretary of the Customs Consultative Committee (CCC), acknowledged that while the four per cent FOB levy is aligned with customs modernisation goals, it undeniably increases the financial burden on shippers and could hurt business competitiveness.
“Although it replaces older charges and supports digital transformation, it still adds cost for importers. This could affect market affordability and lead to a drop in trade volumes,” Nweke said.
Indeed, National Bureau of Statistics (NBS) data supports this. While the nominal value of used vehicles imported rose to N1.47 trillion in 2023, it dropped to N1.26 trillion in 2024. But this modest drop in naira terms masks a deeper contraction in real terms, given that the naira’s value fell by over 50 per cent in the same period.
Consumer Impact Looms Large
For many importers, the cost hike is not just an accounting inconvenience—it’s a survival issue. Most operate on bank loans and tight profit margins. With freight charges from the U.S. averaging $1,200 to $1,300 per vehicle, and clearing costs skyrocketing, many are simply walking away from shipments.
“Some people just abandon their vehicles. Customs ends up auctioning them, but even that process isn’t transparent,” Okoro noted.
Ultimately, the rising clearing cost is passed on to the end consumer, with ripple effects already visible in the market. Middle-class families, already priced out of new vehicles, are now facing a shrinking pool of affordable used cars as well.
Conclusion: Policy or Punishment?
While the Nigeria Customs Service insists the four per cent FOB charge is vital for funding reforms, stakeholders argue that the timing, calculation method, and poor communication surrounding the policy have combined to create more harm than good.
With inflation at a record high and port activity on the decline, many are left questioning whether the cost of “modernisation” might be too steep for Nigeria’s already overburdened economy. Unless urgent steps are taken to review or better implement the levy, the clearing process—and the broader consumer economy—may remain stuck in reverse.