DESPITE calls for a fixed rate, the Nigeria Customs Service (NCS) has again adjusted the foreign exchange (FX) rate for import duties to N1,441.58/$.
This represents a 4.94 per cent increase compared to the N1,373.64/$ adopted on May 1.
The rate adopted by Customs was observed on Friday, May 3, on the federal government’s single window trade portal.
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The Customs typically adopt FX rates recommended by the Central Bank of Nigeria (CBN) for import duties based on trading activities in the official FX market.
Some economic analysts say the volatile exchange rate’s influence on the Customs duty has been ‘fatal’ for businesses in a largely import-dependent economy like Nigeria.
The new FX rate for import duties is above the official market rate of the naira as of May 2 when the naira closed at N1,402.67/$ on the official market.
In the parallel market, the naira closed at N1,380 to the greenback that same day.
According to the CBN on February 23, the Customs and other related parties must adopt the closing rate in the official window for import duty.
The apex bank said the FX rate at the point of importation should be used for import duty assessment until the termination date and clearance are finalised.
Commenting on the frequent changes in the customs FX rate for import duties on May 1, Muda Yusuf, chief executive officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), said such movement was detrimental to the economy.
He said the frequent changes negatively impacted the economy’s real sector activities — such as planning, production, and other activities.
In his reaction, the Director-General of the Manufacturers Association of Nigeria (MAN) Segun Ajayi-Kadir told The ICIR that the association was rooting for N800/$ as basis for the import duty calculations. This, he said, would make businesses make proper projections and have a moderate cost of production, which would bring down the cost of the end product.
“We have been engaging the government on this because if we keep having price uncertainties with the import-duty rates, it will be passed to the consumers at higher prices, leading to low sales. The disposable income of Nigerians is low and prices are up.”
Commenting further, he said, “It will lead to moderate cost of production and raw materials inputs, and it will bring down cost of end products and increase volume of sales. More production and sales means more revenue for the government and overall moderate inflation.”
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.