THE latest naira depreciation has resulted in import duty spike as Nigeria Customs Service (NCS) exchange rate for import duty collection has risen by 11.0 per cent.
A check by The ICIR showed that the duty has risen from N1,150/$ charged on Tuesday, April 23, to N1,277.52/$ on Thursday, April 25.
This is according to the latest update on the customs exchange rate window.
The rise indicates an increase of N127.36 within the two days.
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The 11 per cent rise is coming on the heels of concerns about an incessant increase in Customs duty. Economic analysts have urged the government to have a fixed rate on duty payment, which would reduce inflation.
“Let the Central Bank of Nigeria have a fixed rate for import duty. It will help to moderate inflation rise which is causing lots of problems to the economy,” an economist and the former Director-General of Lagos Chamber of Commerce and Industry, Muda Yusuf, told The ICIR.
The constant adjustments of exchange duty enable ‘price gouging’ by businesses instead of allowing traditional market fundamentals to determine the price of goods.
This development does not sit well with manufacturers who had, on several occasions, engaged the government on this while seeking a rate that would remove uncertainties in the prices of commodities.
“It will lead to moderate cost of production and raw materials inputs, and it will 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,” the Director-General of the Manufacturers Association of Nigeria (MAN) Segun Ajayi-Kadir told The ICIR.
Notably, the Central Bank of Nigeria (CBN) had previously announced that the exchange rate indicated on the Form M application date would be used for duty collection calculations.
Collaborating closely with the CBN, the NCS regularly updates the exchange rate to synchronise with the official market rate on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, consequently leading to frequent adjustments in the rate.
The exchange rate for Customs import duties collection has steadily increased after the naira depreciated from a peak of N1612.28/$ earlier in March to just over 1,100, occasioned by the strengthening of the naira.
The Customs duty has risen more than six times under President Bola Tinubu, prompting concerns about its impact on the rise of commodity prices and growing food inflation at 40 per cent.
However, the exchange rate has steadily risen since the naira depreciated last week.
On April 21, the exchange rate stood at N1,150 from N1,147 because of the marginal weakening of the naira.
On Thursday, the naira closed on the official window at N1329.4 to the greenback, according to data from the CBN.
The naira slumped 17 per cent to a one-month low at N1,300/$1 on the official window on Wednesday, April 24.
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.