The levy, introduced under the Nigeria Customs Service Act, 2023, was aimed at boosting government revenue.

The federal government on Monday suspended the implementation of a 4 per cent Free on Board (FOB) levy on imports after concerns it could fuel inflation and hurt trade competitiveness.

In a directive to the Nigeria Customs Service, signed by Raymond Omachi, permanent secretary, special duties in the office of the minister of finance and coordinating minister of the economy, the ministry said the suspension took effect immediately.

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"Many importers and businesses have raised concerns about the increased financial burden this levy imposes, with potential adverse effects on inflation, trade competitiveness, and the overall business climate in Nigeria," the letter read.

The levy, introduced under the Nigeria Customs Service Act, 2023, was aimed at boosting government revenue. But trade groups and economists warned it risked raising import costs, worsening inflation, and undermining efforts to stabilise the economy.

Nigeria's annual inflation stood at 20.12 per cent in August, driven by higher transport and food prices following the removal of fuel subsidies and a sharp fall in the naira. Import-dependent businesses had raised concerns that the charge would further push up costs for consumers.

The ministry said suspending the levy would create room for "comprehensive stakeholder engagement and a thorough review of the levy's framework and its broader economic implications." It added that the government would work with Customs and relevant parties to design a more equitable revenue measure.

The move comes as Nigeria struggles to raise non-oil revenues while cushioning the impact of reforms that have strained households and businesses.