CBN reviews FX rates on import duty amid increasing commodity prices

THE Central Bank of Nigeria (CBN) has reviewed the formula for fixing foreign exchange (FX) rates for Customs duty on importation following public outcry at the rising commodity cost.

The apex bank  said in a memo on Friday, February 23, addressed to the Nigeria Customs Service (NCS) and all authorised dealers.

According to its Director of Trade and Exchange Department, Hassan Mahmud, the idea is to check irregular changes in the Import Duty Assessment levies applied by the NCS.

“Following the liberalisation of the FX market, the CBN has noted the concern of Importers of goods and services in the irregular changes in the Import Duty Assessment levies applied by the NCS.

“These developments have further built uncertainties around the pricing structure of goods and services in the economy,” Mahmud said.


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He explained the situation was creating abnormal increases in the final sale prices of items, driven mainly by uncertainty rather than traditional market fundamentals, with implications for near-term inflation trends.

“To this effect, the CBN wishes to advise that the NCS and other related parties adopt the closing FX rate on the date of opening Form M for the importation of goods, as the FX rate to be used for Import Duty Assessment,” he said.

Mahmud maintained that the rate would remain valid until the date of termination of the importation and clearance of goods by importers to enable the NCS and the importers to plan appropriately and reduce the uncertainties around varying daily exchange rates in determining their revenue or cost structure.

“Therefore, effective Feb. 26, the closing rate on the date of opening of Form M for the importation of goods and services will be the rates that will apply for the assessment of import duty. This supersedes the requirements of Memorandum 9 of the CBN Foreign Exchange Manual.

“While the CBN is mindful of the initial volatility and price distortions in the aftermath of the FX market liberalisation, the apex bank is confident that these reforms would ensure stability in the market and entrench market confidence,” he added.

The ICIR had reported that Customs duty has risen six times since President Bola Tinubu came into office, as cargo is now stuck at various Nigerian ports.




     

     

    The frequent increases have raised concerns among Nigeria’s business community as the duty collection has recently risen to N1,444.56 to the dollar.

    The NCS had earlier adjusted the rate from N951 to N1,356 to the dollar on February 2.

    In another report, The ICIR explained that the rise has negatively impacted commodity prices.

    It noted, for instance, that the Association of Master Bakers and Caterers of Nigeria (AMBCN) has vowed to commence a nationwide strike from February 27 over increasing prices of baking materials, sugar, yeast, and vegetable oil.

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