CEO, CPPE, Muda Yusuf
KOREDE FOGO
The Centre for Promotion of Private Enterprise (CPPE), on Sunday, warned the federal government against cargo diversion or smuggling except the Central Bank of Nigeria (CBN), to peg the Customs exchange rate for clearance of cargoes at the port at N1,000/$1.
It could be recalled that earlier in June 24, 2023, the CBN adjusted the exchange rate from N422.30/$ to N589/$, and on July 6, 2023, it was adjusted to N770.88/$, on November 14, 2023, it was adjusted to N783.174/$, in December it was adjusted to N951.941/$.
Also, on February 2 it was moved to N1, 356.883/$ and on February 3, it was raised to N1, 413.62/$, on Saturday, February 10, it was changed to N1,417.635/$, on Monday February 11, it was moved to N1,444.56/$1 and on Wednesday, February 14, the CBN adjusted the exchange rate to N1481.482/$1 and on Thursday, February 15th, 2023 it was moved to N1,515.092/$1.
On Friday, February 16th, 2024, the CBN reduced the rate to N1,472.756 per dollar, now, today, Wednesday, February, 21, 2024, it exchanged for N1605.82/$1.
But, on Friday, 21at February, 2024, the Customs duty rate was reviewed downwards from N1, 605.82/$ to N1, 488.896/$. This reduction represents a 7.3 percent drop when compared to the old rate of N1, 605.82/$ used as of Thursday, February 22, 2024, and a reduction of N116.924 less on a dollar.
However, in a statement by the Chief Executive Officer of the centre, Muda Yusuf, said the pegging at N1000/$1 will address the current prohibitive cost of cargo clearance at the ports which had risen by over 40% in the last two months.
The Centre warned about added risk of cargo diversion to neighboring countries and heightened smuggling which could jeopardize the realization of customs revenue target.
“The Centre for the Promotion of Private Enterprise [CPPE] welcomes the decision of the Central Bank of Nigeria [CBN] to approve the use of the exchange rate reflected on the import documentation [Form M] at the onset of import transaction. This was a laudable response to the grievances of investors in the economy.
“This would reduce the current uncertainty around imports and related transactions in the economy. However, the CBN intervention did not address the bigger and the more troubling issue of the current prohibitive cost of cargo clearance at the ports which had risen by over 40% in the last two months.
“The high exchange rate for import duty assessment is fueling the already high inflation, increasing production and operating costs for manufacturers and other businesses, worsening the cost-of-living crisis and putting thousands of maritime sector jobs at risk. There is also the added risk of cargo diversion to neighboring countries and heightened smuggling which could jeopardize the realization of customs revenue target.”
“In the light of this, the CPPE strongly appeals to the CBN to peg the customs duty exchange rate at N1000/$ 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. Instances of abandoned cargo is on the increase as a consequence of escalating trade cost. These are not good outcomes for an economy seeking to ensure recovery, drive growth, promote inclusion and guarantee social stability.”
“Businesses are currently grappling with multiple macroeconomic and structural headwinds which are negatively impacting profitability, competitiveness, job creation, retention of existing jobs and business sustainability.”
“Pegging the customs duty exchange rate resonates with the present intervention measures to mitigate the current hardships in the country. Besides, this proposition does not any way detract from the economic reform agenda of the present administration. 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.”