TRADE POLICY: FG sets to change from FOB to CIF

At long last, the Federal Government may have finally concluded plans to to change its trade policy from the prevailing Freight on Board or Free on Board (FOB) to Cost, Insurance and Freight (CIF), which is the preferred choice among the most countries of the world, because of its economic benefits.
The FOB makes it mandatory for the buyer to determine who ships and who insures the goods to his port 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 on CIF basis.
If, all goes well, the policy swing is expected to come into effect before the end of the year.
Indications to this momentous move by the Federal Government was given in Houston, Texas, United States (US) on the sidelines of the just-concluded Offshore Technology Conference (OTC), by the Senior Special Assistant to President Goodluck Jonathan on Maritime Services, Mr. Leke Oyewole.

He said that work has been completed on the document for the policy change, in order to, according to him, help indigenous operators.
Oyewole explained that a document to that effect was nearing completition, having received inputs from a number of Federal Ministries, departments and agencies, including Finance, Trade and Investment, as well as Petroleum Resources, among others, after it has first gone to the President.
Oyewole said that after a final vetting by the Economic Management Team (EMT) headed by the Finance Minister, Dr. Ngozi Okonjo-Iweala, the document will return to the President for it to be signed into law.

Oyewole said: “The EMT always have a long list of issues 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 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.”
On the possibilty of the policy being reversed before the end of the year, he said: “I’m hopeful. I’m very very hopeful. But you also know that if today the President signs that the policy should be reversed, Nigerians would not begin to carry 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 launch suddenly into the mainstream, otherwise we will not be able to cope with the dynamics of international politics that will be involved. We need to find a way to move in gradually, and all these have been taken care of in the document I told you has been moving from table to table, so that we have a sustainable re-entering into the international market and trade.”

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