By Merit Ibe and Steve Agbota
For the umpteenth time, the Centre for the. Promotion of Private Enterprise (CPPE) has decried the high and volatile exchange rate for import duty assessment which is putting investments in the country at risk and weakening investors’ confidence.
Worried over government delay to address the problem of prohibitive and unpredictable exchange rate for cargo clearance, Director of the Centre, Dr Muda Yusuf believes that is a major policy adjustment needed to complement measures which will address the current cost-of-living crises in the country.
He stated that the high and volatile exchange rate for import duty assessment was fueling the already high inflation, increasing production and operating costs for manufacturers and other businesses, worsening the cost-of-living crisis, putting maritime sector jobs and investments at risk and weakening investors’ confidence.
“There is also the added heightened risk of cargo diversion to neighboring countries and smuggling which could jeopardize the realization of customs revenue target.
“This situation additionally creates serious competitiveness challenges for ethical and compliant investors in the economy because of their relatively elevated production and operating costs.”
Yusuf therefore reiterated the Centre’s appeal to the federal government to peg the customs duty exchange rate at N1000/$ for the next six months in the first instance through an Executive Order, adding that it resonates with the current commitment of the government to alleviate the current hardship on citizens and the burden on businesses.
Lamenting the N1578/$ current customs duty exchange rate on the Nigeria Customs Service portal, which has been changing almost weekly, the CPPE boss noted that it was not good for the investment environment.
Making clarifications on the ongoing foreign exchange reforms, he opined that the determination of the customs duty exchange rate by the CBN is an intrusion into trade policy space which needs to be urgently corrected.
To permanently address this matter, he suggested that it might be necessary to amend the Customs Act to move the responsibility of determination of applicable exchange rate for import duty payment to the fiscal authorities.
“This is necessary to bring such rates in alignment with the extant trade policy direction of government and remove the current avoidable uncertainty around international trade. This is what our peculiar circumstances demands. It is important to localize and adapt economic policy models to our peculiar circumstances.
“It is important to clarify that this proposition is without prejudice to the ongoing foreign exchange reforms of the present administration. Contrary to concerns expressed in some quarters, the adoption of lower exchange rate for computation of customs duty would not undermine the current foreign exchange reforms. It is not a request for a concessionary exchange rate for forex allocation.
“We are dealing with two separate issues here. One is about foreign exchange policy, the other is purely a trade policy matter. The responsibility of the CBN should end at the point of opening of Form M for importers within the context of extant foreign exchange policy. All other matters relating to international trade should be within the remit of the Federal Ministry of Finance and the Federal Ministry of Trade and Investment. These are the institutions statutorily responsible for trade policy issues.
“The determination of the customs duty exchange rate by the CBN is an intrusion into trade policy space which needs to be urgently corrected.
Meanwhile, in order to permanently address this matter, it might be necessary to amend the Customs Act to move the responsibility of determination of applicable exchange rate for import duty payment to the fiscal authorities. This is necessary to bring such rates in alignment with the extant trade policy direction of government and remove the current avoidable uncertainty around international trade. This is what our peculiar circumstances demands. It is important to localize and adapt economic policy models to our peculiar circumstances.”