…MSMEs, importers, exporters, clearing agents say increase death knell
• As expert urges FG to remove duty computation from CBN
By Uche Usim
Players in the Micro, Small and Medium Enterprises (MSMEs), importers, exporters, clearing agents and the masses are currently angry, troubled and hopeless as import duty exchange rate (also called Customs duty) jumped from N1,356.883/$1 to a staggering 1,413.62/$1 within 24 hours. The rate is determined by the Central Bank of Nigeria (CBN).
Importers and their agents got their first shock on Thursday morning, when they logged onto the Nigerian government’s trade portal and saw that the exchange rate used in computing import duty payment had swelled from N951.941/$1 it was in December 2023 to N1,356.883/$1. They likened it to a midnight coup.
While they were still smarting from the scathing adjustment, the rate grew to N1,413.62/$1 within 24 hours, leaving them in deeper frustration.
The unsettling development has been described by players in the maritime ecosystem as an insensitive move and a blatant disregard to public outcry that will further push millions of already frustrated Nigerians into multi-dimensional poverty.
The move, analysts noted, would not only cause a surge in inflation, but likely bury many MSMEs who are already on their final gasp of ruin.
When Sunday Sun logged onto the Nigerian government’s trade portal, the single window for trade, the Customs exchange rates were spread thus: euro-N1,530.18; GBP (British pounds)-N1,790.073, JPY (Japanese yen)-9.6145, US dollar-N1,413.62 and so on.
The unfortunate development means the prices of food, medicines and other goods will skyrocket in a system where inflation is already above 28 per cent and the minimum wage is N30,000 (not paid in many states).
Commenting on the development, the Director General, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, advised that the duty to determine and compute exchange rates should rest with the fiscal authorities (the Finance Ministry) while the CBN concentrates on other pressing matters.
He noted that the drastic upward review of the exchange rate for the computation of import duty from N952 to N1,357 and now N1,413 would have a devastating effect on businesses across all sectors. This is like the last straw.
“Businesses are yet to recover from the shocks of the new round of currency devaluation resulting from the sudden unification of the exchange rate which has driven the official exchange rate to about N1400.
“It is a double jeopardy for the investors across all sectors, especially those in the real sector. This action will further fuel inflation as production and operating costs escalate. The vulnerable segments of the population will be further impoverished as cost-push inflation gets exacerbated.
“CPPE appeals to the CBN to reverse this rate hike in the interest of the already impoverished segments of our society and the numerous businesses that are already on the verge of collapse.
“The shocks, disruptions and dislocations are of immense proportions. It is even worse that the rates take immediate effect. This is a policy action that is difficult to justify, especially in the context of the multi-dimensional headwinds that businesses are grappling with.
“The CPPE recommends that, going forward, the determination of the exchange rate for import duty computation should be treated as a fiscal policy matter and located within the remit of the fiscal authorities which is the Finance Ministry. This is necessary for proper alignment with extant fiscal policies”, he explained.
Also reacting, the National President, Association of Motor Dealers of Nigeria (AMDON), Ajibola Adedoyin, in a telephone conversation with Sunday Sun said that the tumbling naira and high exchange rate has led to a 60 per cent reduction in vehicle importation as hundreds of his members have dumped vehicle dealership for other ventures just to make ends meet.
Adedoyin noted that with ravaging poverty becoming the order of the day, the majority of Nigerians can no longer buy imported vehicles as the prices have become unaffordable.
He said that the cost of transportation would increase astronomically, further worsening the plight of the masses.
A car dealer and importer, Miracle John, told Sunday Sun that the galloping exchange has made it impossible to remain in business.
“I’ll go into farming in my village. That’s the only thing I can do at this time. The country is finished”, he lamented.
Another player in the SME space, Judith Okafor, said that the rapidly tumbling naira and hyper-inflation remain a double whammy that will kill millions of businesses in weeks ahead.