NIGERIA manufacturers are kicking against the constant rise in customs duty above the official foreign exchange (FX) rate figure, which they say is not incentivising access to raw material and local production.
Checks by The ICIR have shown that the exchange rate for duties collection by the Nigeria Customs Service (NCS) has risen by N3.00 above the official closing rate of the Naira on the NAFEM window.
The manufacturers, as a result, are seeking a deliberate lowering of the cost of importing manufacturing products and raw materials to lessen Nigeria’s rising inflation.
The director-general of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, told The ICIR exclusively that the constant rise in customs-duty rate is stifling local production and importation of raw materials for the manufacturing sector.
“Something needs to be done to deliberately lower the cost of importing manufacturing products and raw materials. What is important is for us to incentivise productivity and not stifle it.
“The manufacturing sector needs to be insulated from the vagaries of the exchange rate since the government reforms are taking a while to materialise,” he said.
Checks on the customs exchange rate portal revealed that the FX rate for duties collection stands at N1584/$ while the naira closed at N1581 to the greenback on the July 17, 2023 according to financial infrastructure group warehousing data.
The current customs duties exchange rate of N1584 /$ is one of the highest since March 2024 when the naira depreciated near the N1600/$ mark. In recent times, the naira has weakened against the dollar despite efforts by the Central Bank of Nigeria (CBN) to boost supply in the foreign exchange market.
The ICIR has earlier reported that the nation’s inflation spike has been partly linked to the incessant hike in import duty, as the country is largely import-dependent.
Nigeria’s inflation is currently at 34.19 per cent in June and the official lending rate at 29.11 per cent which is squeezing lending to the manufacturing sector.
The MAN director-general insists N800/$ rate as recommended by the Presidential Fiscal and Tax Reform Committee (PFTRC) would help inflation moderate make business projections in the productive sector of the economy lesser and bring down costs of end products.
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.
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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.