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Foreign trade: FG to change from FOB to CIF

By on May 10, 2013

Federal Government is set to change its trade policy from the present Free on Board (FOB) to Cost, Insurance and Freight (CIF) which most countries across the world use because of its economic benefits, before the end of the year.

The FOB makes it mandatory for the buyer to determine who ships and insures the goods to his port of destination while the CIF ensures that the seller determines who ships and who insures the goods brought from him.

Presently, goods bought from Nigeria are on FOB basis while Nigeria trades with other nations is on CIF basis.

Disclosing the position of the federal government to Vanguard in Houston, Texas at the ongoing Offshore Technology Conference (OTC), Leke Oyewole, Special Adviser to President Goodluck Jonathan, said work has been completed on the document for the change in policy so as to help indigenous operators.

Oyewole explained that a document to that effect has been completed and inputs from Ministries made.

According to him, all that is left now is for the Economic Management Team (EMT) to take a finally look at it before it returns to the President for it to be signed into law.

“The EMT always have a long list of issue to attend to, they were to have that meeting last month but it was not possible because of reasons but I can tell you that within this month, most likely it will be discussed and when it is discussed and it is agreed at that level, then it will be left to the President to just sign. Once he signs, it becomes an order.”

Asked whether the policy would be reversed before the end of the year, the Special Adviser said, “Am hopeful, am very very hopeful but you also know that if today the President signs that the policy should been reversed, Nigerians would not begin by tomorrow. We need to give time sufficient enough for Nigerians to acquire vessels to begin to carry.”

He noted that country presently “operate on FOB, in which case, soon as we put cargo onboard the ship, the fund, the money is released to Nigeria. When we go on CIF, it will mean that until the cargo is delivered before the money will come to Nigeria, there will be a gap, that gap most not be too wide otherwise it will hamper the national funding because we get most of our revenue from these products (petroleum products).

“We have stayed back for too long, we can not lunch suddenly into the mean stream, otherwise we will not be able to cope it the dynamics of international politics that will be involved. We need to find a way to move in gradually and all these has been taken care of in the document I told you has been moving from table to table, so that we have a sustainable reentering into the international market and trade.”

 

 

 

[Vanguard]