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•Importation declines by 60%
•Cargoes abandoned with rising cost of clearing
By Steve Agbota, [email protected]
Stakeholders in the maritime sector have decried the Federal Government’s unstable exchange rate now hampering business activities especially in the claring of cargo at the nation’s ports.
Already, the industry had been reeling under the burden of deteriorating business climate coupled with a multiple taxation and scarcity of forex.
But the recent adjustment of exchange rate by the Central Bank of Nigeria (CBN) for purposes of calculating charges on importation seems to have worsened the situation. For instance, the CBN had on June 24, 2023, adjusted the exchange rate from N422.30/$ to N589/$.
On July 6, it was re-adjusted to N770.88/$, and further to N783.174 on November 14 with far reaching implications on cost of doing business.
Just last week and pricisely on December 7, the CBN again increased the exchange rate for cargo clearance from N783/dollar to N952/dollar. The development that didn’t go down well with the nation’s business community. This was even as they lamented that the implications on the importation and clearance of cargo at the ports would be grave.
Stakeholders who spoke with Daily Sun, said that many importers are already in debt due to the persistent exchange rate volatility while some are leaving Nigeria to neighbouring countries.
However, many import and export jobs already paid for are getting Debit Notes from the Nigeria Customs Service (NCS) because of the new CBN exchange rate.
Daily Sun also learnt that many importers and exporters might run out of business because many import and export dealings have been done based on the old exchange rate.
An importer, Edward Bassy, said with the increment, cost of clearing cargo and prices of goods will rise astronomically while importers will pay more through their clearing agents to Customs as duty payable.
“Already, the industry is facing tough time due to policy inconsistency. We have the issues of insecurity, obsolete infrastructure and other challenges facing our maritime sector already. The unstable exchange rate has done more damages than good to us we the importers. That is the reason things are so expensive in the market because no importer will not like to make profit. So we need to adjust the prices of our imported goods to make profit.
“Due to harsh business operating environment, some importers are already leaving Nigeria for other neighbouring countries. With this new increment, people are already abandoning cargoes at ports while we already had 60 per reduction in importation. Government needs to do something fast to avert the harsh effect this will have on ordinary Nigerians and business community,” he said.
Speaking on the increment, a clearing agent, Comrade Onome Monije, who rued the increment, said freight forwarders and importers would certainly have a bleak Christmas, as clearing agents will now pay more for cargo clearance at the various seaports.
She said the increment will affect vehicle clearance, and clearing agents should engage their clients to forestall possible disagreement.
“The Federal Government has increased the Dollar exchange rate, from N422.30 to N589.45, then to N770.88. In November, it was moved to N783.174 and now, we are at N951.941 to a dollar. What it implies in simple terms is that, if clearing agents have a Debit Note that has not been paid on the system or Pre-Arrival Assessment Results (PAAR) or they have given you the value and you have not captured, it has affected you directly.
“We just believe that maybe with time, we will see low exchange rate and it will become beneficial to the importers as well because once there is a change in the portal, there is nothing anybody can do about it. But if you have captured or accessed your work, you are good to go and your consignment would be released for you if you don’t have any infraction.”
The Chief Executive Officer of CPPE, Dr. Muda Yusuf, appealed to the CBN and the Coordinating Minister of the Economy to review the increase.
He hinted that trade policy measures should not be subjected to the full vagaries of the philosophy of market forces.
According to him, the recent review will make the cost of importation through official channels even more prohibitive, saying the increment will result to unintended outcomes such as greater incentives for smuggling and many more.
“The move would serve as a greater incentive for smuggling, more industries that are dependent on the imported raw materials may shut down. Customs revenue may decline as imports through official channels become difficult.
“Worsening an already bad inflation situation, worsening an already bad poverty situation and the welfare conditions of the citizens, heightened corruption vulnerabilities in the international trade ecosystem. Increase in the influx of substandard products amid high and increasing cost of products,” he said.
He said that this is not a good time for the CBN to increase the exchange rate for the computation of import duty and the clearing of cargo by importers.
“This review will impact the cost of all imports, including raw materials for manufacturers, pharmaceutical products, machineries, energy products, petroleum products and many more.
“This will make a bad situation worse for investors in the economy. It will worsen the misery of the citizens amid an excruciating inflationary condition,” he said.
Meanwhile, the National President of the Africa Professional Freight Forwarders and Logistics of Nigeria (APFFLON), Chief Frank Ogunojemite, called on the government to take proactive measures to address economic stability in the country.
“From the business perspective, it is a very sad news to wake up and see the margins of Customs exchange rate from N783 -N951, which means that the cost on both importations and exportation will definitely increase.
“This will also affect the projected amount allocated for such procurement and in return, the end users will carry the burden. Without any reservations, inflation will come in and possibilities of businesses collapsing is higher with the attendant unemployment.
“The weakness in people’s purchasing power due to inflation caused by all these incessant increments will aid bribery and corruptions or inefficiency at work places.
“Government needs to take proactive measures to address economic stability in the country because there might be geometric rise in criminal activities due to businesses shutting down in addition to present high unemployment rates,” he said.
A former president of the National Association of Government Approved Freight Forwarders (NAGAFF), Chief Eugene Nweke, implored Customs to always advise the CBN before policies like exchange rate increase is carried out.
“Yes, the Customs enforces government policies, but Customs can also advise government. It is only Customs that has an Excise Department, the CBN doesn’t have such, so it’s only Customs that has the data of all the manufacturing companies that have folded up over the years due to these type of policies.
“Going forward, there is need for Customs to be advising government, that’s why the NCS has a Board. This policies have led to hyper-inflation over the years. Many companies have folded up and unemployment figures have continued to shoot up,” he said.
