By Steve Agbota
Maritime expert and President of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, has urged the federal government, through the Central Bank of Nigeria (CBN), to implement a special exchange rate for calculating import duties. In a letter dated July 27, 2024, addressed to President Bola Ahmed Tinubu and other top officials, Amiwero emphasized that a stable and manageable exchange rate for import duties would stimulate economic growth and benefit the broader Nigerian population.
Amiwero expressed significant concern over the current practice of using floating exchange rates for customs duty calculations. He argued that this approach has contributed substantially to the rising costs of goods and escalating food prices in Nigerian markets. According to Amewero, the use of a floating exchange rate introduces unpredictability into the process of clearing goods at ports, which complicates logistics and places a heavy financial burden on consumers.
“We wish to highlight to the Federal Government the severe challenges faced by Nigerians, particularly due to the soaring prices of goods driven by the floating exchange rate applied to import duty computations,” Amewero stated. “This issue has drastically reduced importation, disrupted transportation, and made basic foodstuffs increasingly scarce, especially for those who struggle to make ends meet and have no financial safety net.”
He further explained that the liberalized foreign exchange market’s fluctuating rates have led to inconsistent and unpredictable pricing, causing an abnormal surge in the final sale prices of goods. This situation, as described in the government’s circular TED/FEM/PUB/PC/1001/007 dated February 23, 2024, has adversely affected the traditional market and the general public, creating economic instability.
As a member of the Presidential Task Force on the Reform of Nigeria Customs Service, Amewero detailed the complexities of the current process, which involves purchasing foreign exchange from the liberalized market and calculating import duties based on these variable rates. He noted that the irregular and often high exchange rates have negatively impacted the well-being of Nigerians, leading to broader economic repercussions.
“The liberalisation of the forex market under a floating exchange rate system has raised serious concerns, particularly regarding the importation of goods and services,” Amewero continued.
“The economic effects are evident in the daily lives of Nigerians, who face increasing difficulties in accessing essential items due to the unpredictable cost of imports.”
To address these challenges, Amewero called for measures to eliminate the uncertainties and inconsistencies associated with the current exchange rate system. He stressed the importance of stabilizing the domestic trading environment to provide a more predictable framework for importers. The current uncertainty has made many importers hesitant to continue their business, as they struggle to secure foreign exchange and pay import duties under fluctuating rates.
“The impact on the manufacturing sector, small and medium-sized enterprises, the informal economy, and traditional markets has been profound,” he concluded. “Many essential goods are either unavailable or beyond the financial reach of most Nigerians. Implementing a special exchange rate for import duties is crucial for economic stability and ensuring that essential goods remain accessible to all.”