Manufacturers seek fixed rate for Customs duty to address inflation

MANUFACTURERS have called for a fixed Customs import duty-exchange rate to combat Nigeria’s rising inflation, currently at 33.02 per cent.

The nation’s inflation spike has been partly linked to the incessant hike in import duty, as the country is largely import-dependent.

The Nigeria Customs Service (NCS) through the Central Bank of Nigeria (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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Analysts say this puts a lot of pricing uncertainties on businesses, which could spur “price gouging”.

“We should have a fixed rate for our Customs import duty. It should be a fixed rate of maximum of N1,000 and let it remain like that for the next six months or a year,” a Board Member of the Nigerian Customs Service and former Director-General of Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, told The ICIR.

According to Yusuf, the fixed rate makes the whole system more predictable, reduces uncertainties in commodity pricing, and aligns the country with global trade facilitation.

“Different import duty puts different prices, week in, week out, and it’s not good for business.

“For purposes of trade, let’s stabilise the rate. Our tariff book is a seven-year book. The whole essence is to make trade predictable. We seem not to be following our tariff book on this, and it’s not good for trade,” he said.

He noted that the foreign exchange component for import duty disrupted trade certainty and did not position Nigeria well for global trade.

“We already have enough issues with FX volatility and currency management. For the import duty, we can fix the rate to ensure that international trade is more predictable. A fixed rate will help bring down import costs and help moderate inflation,” he added.

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.”

Concerned about consumer exploitation, the Federal Competition and Consumer Protection Commission (FCCPC) has intensified supermarket supervision to address possible price gouging concerns.

On Thursday, April 18, an enforcement team led by its acting executive vice chair, Adamu Ahmed Abdullahi, the FCCPC raided several supermarkets.

Before the raid, the FCCPC, on April 17, urged Nigerians to report businesses hiking prices of goods, saying that despite the naira appreciating against the dollar, costs of commodities were still soaring.

The commission said it would monitor and investigate price hikes in the markets to protect consumers from exploitation.

Checks by The ICIR showed that the rate has risen more than six times since the inception of Tinubu’s administration, raising concerns about possible arbitrary hikes in the prices of commodities by importers.

The NCS has reduced the exchange rate for import duties collection from N1238.1 to the dollar to N1,147/$.






     

     

    The Customs exchange rate for duties collection has remained at N1238/$ for over a week now—the longest it has stayed at a particular rate in recent times.

    An economist and business consultant, Franklin Akinyosoye, told The ICIR  that the Customs should focus on discouraging goods that could be produced in-country with higher import duties.

    “I don’t have issues with the constant rate review for Customs duty. I wish they could do it more for only the goods and services we don’t need that much to discourage importing all sorts.

    “There are items that shouldn’t have import duties at all, those goods we can’t produce at all in Nigeria. That way, items with high Customs duties will be discouraged. We are too dependent on foreign goods or items. I suspect the CBN is also using it to manage the foreign exchange rates, discourage imports of what we don’t need, and to also raise revenue to fund other aspects of the economy,” he said.

    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.

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