The Central Bank of Nigeria (CBN) has again dashed importers’ hopes by raising the exchange rate for Customs import duty by 14 per cent.
The CBN made the decision and ignored calls for a fixed rate to moderate rising inflation, which is currently at 33.1 per cent.
The Nigeria Customs Service (NCS), through the CBN, has consistently fixed the exchange rate to reflect the official market rate on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, hence the regular changes in rate.
In previous reports by The ICIR, experts called for a fixed rate to moderate the rising price of goods and rising inflation.
However, the CBN has kept changing the rate, which has affected the rising prices of commodities by businesses.
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Information obtained from the official trade portal of the Nigeria Customs Service (NCS) shows that the apex bank raised the Customs FX duty rate from N1,164.84/$ to N1,327.35/$ on Monday, April 29.
This represents a 14 per cent increase in rate compared to the old rate of N1,164.84/$ previously used for the opening Form M and an increase of N162.51 on a dollar needed to clear goods at the port.
This means that importers opening Form M on Monday, April 29, required more money to pay import duties than those who opened Form M at the weekend.
The naira had its worst run since the devaluation in January, falling 7.8 per cent to N1,339.23 on Friday, April 26, from N1,234.49 at the beginning of the week, according to data by FMDQ Securities Exchange.
The naira appreciated to N1,280/$ Saturday, April 27, an 8.57 per cent gain compared to N1,400/$ Friday, according to multiple sources.
Commenting on the development, the Chief Executive Officer of the Centre for Promotion of Private Enterprise (CPPE), Muda Yusuf, said Nigeria needed to de-emphasise revenue generation because too much emphasis on revenue causes growth, job creation, and development to suffer.
He said fiscal authorities needed to stabilise rates to give policy support to critical sectors of the economy and also give breathing space to investors without burdening them with too much taxation.
“A volatile customs duty rate instead of a fixed rate is not good for business and trade,” Yusuf said.
The Director-General of the Manufacturers Association of Nigeria (MAN) Segun Ajayi-Kadir who also spoke on the development 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, the higher prices will be passed on to the consumers, leading to low sales. The disposable income of Nigerians is low, and prices are up.”
He suggested that the fixed rate would lead to a moderate cost of production and raw materials inputs, and it would bring down the cost of end products and increase the volume of sales.
“More production and sales means more revenue for the government and overall moderate inflation,”he added.
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.