The Centre for the Promotion of Private Enterprise (CPPE), one of Nigeria’s front-line private sector advocacy groups, has expressed its concern on the problem of the prohibitive and unpredictable exchange rate for cargo clearance and called on the Federal Government to address the fiscal measure.
The group’s Chief Executive Officer, Dr. Muda Yusuf, at the weekend stated that the Centre believed that revisiting the FX exchange rate saga remained a major policy adjustment that needed to happen to complement current measures to address the current cost-of-living crises in the country.
He lamented that the high and volatile exchange rate for import duty assessment as 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.
Similarly, the foremost economist also rued the added heightened risk of cargo diversion to neighbouring countries and smuggling which could jeopardize the realization of customs revenue target, thereby creating serious competitiveness challenges for ethical and compliant investors in the economy because of their relatively elevated production and operating costs.
According to him, in the light of this, the CPPE is reiterating its appeal to the presidency to peg the customs duty exchange rate at N1000/$ for the next six months in the first instance through an Executive Order as this resonates with the current federal government’s commitment to alleviating the current hardships on the citizens and the burden on businesses.
While recalling that the Presidential Committee on Fiscal Policy and Tax Reforms has made similar recommendation and the Organized private Sector (OPS) has also strongly advocated in the same vein, the CPPE boss pointed out that the current customs duty exchange N1578/$1 rate on the Nigeria Customs Service portal had been changing almost weekly and not good for the investment environment.
He clarified: “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”, Yusuf stressed.
