THE Centre for the Promotion of Private Enterprise (CPPE) has called on the Central Bank of Nigeria (CBN) to peg the customs duty exchange rate at N1000/$1 to ease the current hardship in the country.
The CPPE Chief Executive Officer (CEO), Muda Yusuf, said in a statement on Sunday, February 25, welcoming CBN’s decision to approve using the exchange rate reflected on the import documentation (Form M) at the onset of the import transaction.
“This was a laudable response to the grievances of investors in the economy. This would reduce the current uncertainty around imports and related transactions in the economy,” Yusuf said.
He pointed out, however, that the CBN intervention did not address the more significant and more troubling issue of the current prohibitive cost of cargo clearance at the ports, which had risen by over 40 per cent in the last two months.
“The high exchange rate for import duty assessment is fueling the already high inflation, increasing production and operating costs for manufacturers and other businesses, worsening the cost-of-living crisis, and putting thousands of maritime sector jobs at risk,” he said.
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The CPPE boss also noted the added risk of cargo diversion to neighbouring countries and heightened smuggling, which he said could jeopardise the realisation of the customs revenue target.
“In the light of this, the CPPE strongly appeals to the CBN to peg the customs duty exchange rate at N1000/$ for the rest of the year in line with the federal government’s commitment to ease the current hardships on the citizens and the burden on businesses.
“The current customs duty exchange rate of N1488.9/$ is still too high in the context of the current galloping inflation and difficulties facing businesses and the citizens.”
He said instances of abandoned cargo were increasing due to escalating trade costs and that moves were not good outcomes for an economy seeking to ensure recovery, drive growth, promote inclusion, and guarantee social stability.
He noted that businesses were currently grappling with multiple macroeconomic and structural headwinds that negatively impact profitability, competitiveness, job creation, retention of existing jobs, and business sustainability.
According to the CPPE boss, pegging the customs duty exchange rate resonates with the present intervention measures to mitigate the current hardships in the country.
He explained that his proposition is independent of the present administration’s economic reform agenda.
“If anything, it would complement the economic transformation measures because of the expected positive impact on competitiveness, productivity, cost reduction, deceleration of inflation, and employment generation,” Yusuf submitted.
The apex bank had recently reviewed the formula for fixing foreign exchange (FX) rates for Customs duty on importation following public outcry at the rising commodity cost, The ICIR reported.
Customs duty has risen six times since President Bola Tinubu came into office, with the collection currently above N1,400 to the dollar, as cargo is now stuck at various Nigerian ports.