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•Say FG’s policies insensitive, killing businesses
By Chinelo Obogo, Merit Ibe and Steve Agbota
The Central Bank of Nigeria (CBN), on Wednesday, jacked up the exchange rate used in the computation of Customs duties to N1,605.82 per dollar, making it the fifth increase in one month. This comes after it marginally reduced the rate from N1,515.48 to N1,472.756 last week in response to the appeal made by the House of Representatives.
Expectedly, the development has drawn the ire of various stakeholders in the commerce space as many of them described it as death knell on their businesses.
Reacting, the presidential candidate of the Labour Party (LP), Mr. Peter Obi, said the constant increase has had a devastating impact on businesses in Nigeria as many of them have shut down, leading to job losses and widespread hardship.
In a post made on his verified X handle, the former Anambra State governor said the government should end the inconsistency in duty charges as it was affecting the general business atmosphere in the country.
He added that the ever-increasing Customs duties must stop as it is now negatively impacting businesses and shooting up the cost of items and ultimately setting the stage for a civil strife.
“A situation where at the point of initiating importation, Form M and other documents related to importation are based on a particular rate of exchange, duties are calculated at different rates, say N1400 to $1, it becomes a serious business challenge that results in business losses. Worse still, it directly fuels the inflationary spike which is the basis of increasing cost of goods and living.
“Such arbitrary charges will obviously lead to further closure of businesses, and attendant job losses. This is because at the time of the initiation of the business, calculations, including duties, have been made based on the prevailing exchange rate and the prevailing market prices. If this situation is not corrected, our importers may resort to using ports of nearby countries, a situation that will leave our ports under-productive, and further deepen our economy into a worse situation as a result of loss of revenue,” he said.
Obi said the government must show consistency in its policies as this will help with economic forecasting and business planning, pointing out that businesses are dying and manufacturers are shutting down because of the poor and inconsistent economic policies of the government.
“All efforts of the government should be directed at supporting businesses, especially those in the manufacturing sector, to keep their businesses afloat and keep the economy growing, as the small business sector remains the most critical engine of economic growth. We cannot afford to target high customs revenues at the expense of the survival of local businesses, employment and reasonable cost of living,” he said.
Also reacting to the increase, the Lagos Chambers of Commerce and Industry (LCCI), said the hike might lead to the collapse of the import business considering the fact that Nigeria is import dependent. The chairman, SMEs Group of the LCCI, Daniel Dickson-Okezie, told Daily Sun that the increase has affected the cost of importation which could be transferred to the already struggling consumers, whose purchasing power is low due to inflation.
“The effect is that many businesses will close shop of they can’t meet up, which will invariably cause the economy to continue to contrast. There will be low productivity. Already, households are finding it very difficult to survive, as the real income of households are fast disappearing. The SMEs are the worst hit. They don’t have the capacity to access funds like other players. A lot of SME’s are being forced to downsize or pack up after running out of survival ideas and strategies. Most machines and raw materials are being imported for the manufacturing sector, so rate hike is not going to be funny at all, the already ailing manufacturing sector will be hit again, leading to more shops closing down. The SMEs are going to be worse off and this will continue to worsen Nigeria’s unemployment woes,” he said.
The chairman of Coleman Technical Industries Limited (CTIL), George Onafowokan, also lamented over the increase, telling Daily Sun that what businesses are experiencing now is working capital erosion and that the government needs to review a lot of the decisions that have been made. He said: “Machines are being imported into Nigeria, so increasing custom rates figures daily is a fiscal policy issue. I don’t think that is helping matters. It might be increasing revenue to the government but more businesses will continue to die. To resurrect a dead business is literally really difficult. A surviving business can still be improved and that is one key area that we need to review on both the micro and macro policies of the government.”
A foremost licensed Customs agent who does not want his name in print, told Daily Sun that the cost of clearing a 40ft container of food items now cost nothing less than N19.5 million and that two weeks ago, it was N17 million, while the national president of the National Council of Managing Director of Licensed Customs Agents (NCMDLCA), Mr. Lucky Amiwero told Daily Sun that many companies are leaving Nigeria due to a system that is not consistent, predictable and transparent.
According to him, many people who have invested in their business in Nigeria are already looking for alternative destinations like Ghana
“In the next two, three weeks you’ll find out that people would no longer be able to bring in their goods. You’re estimating to clear your foods for three million then the next day they say CBN has increased custom duties, what are you going to do? You have to abandon it because you only have N3 million to clear your goods. Do you go and borrow money to clear your goods? No you have to abandon it in the port,” he said.
Also speaking with Daily Sun on why importers are leaving Nigeria to other neigbouring seaports, the Vice President of Association of Nigerian Licensed Customs Agents (ANLCA), Dr. Segun Oduntan, said everybody knows that there is no economy that thrives under instability and no businessman will stay under instability where they will not be able to dwell.
“No economy is run this way. We are giving the government an ultimatum and we will wait for what comes out of it. It is absurd to run the nation’s economy this way. There is nobody that is in support of the CBN policy,” he said.
An importer, Alade Shokunbi who specialises in building materials, said no importer will want to do business in a country where the exchange rate is not stable, adding that many shippers are leaving the country for other neigbouring countries because it is cheaper to get cheaper exchange rate in some of these countries.
“A lot of Nigerian businessmen are now going to Cotonou to open accounts and move their money there. It makes business sense to open an account there because that will open a window for you to access forex to bring in your goods. The goods my agent will clear for me in Nigeria here for maybe N14 million, I can get it clear for let’s say N6.8 million or N8 million.
“No importer can survive this current exchange rate. It is like a death warrant. That is why some of us are leaving except those who have money to throw around can stay back,” he said.
