The Centre for the Promotion of Private Enterprise (CPPE), a leading organized private sector advocacy group in Nigeria, has advised the Central Bank of Nigeria (CBN) to consider fixing the Customs Duty Exchange rate at N1,000/S1 to mitigate the current hardships of business owners, particularly manufacturers, in the country.
The Centre’s Chief Executive Officer, Dr. Muda Yusuf, in an Advisory Note issued on Sunday, expressed the group’s support for the apex bank’s decision to approve the use of the exchange rate reflected on the import documentation (Form M) at the onset of import transaction.
He described the decision as a laudable response to the grievances of investors in the economy, especially at it would reduce the current uncertainty around imports and related transactions in the economy.
The CPPE boss, however, pointed out that the CBN intervention did not address the bigger and the more troubling issue of the current prohibitive cost of cargo clearance at the ports, which had risen by over 40% in the last two months.
Specifically, he lamented that already the high exchange rate for import duty assessment was fueling the already high inflation, increasing production and operating costs for manufacturers and other businesses, worsening the cost-of-living crisis and putting thousands of maritime sector jobs at risk.
Yusuf, a former Director-General of the Lagos Chamber of Commerce and Industry (LCCI) also maintained that there was also the added risk of cargo diversion to neighboring countries and heightened smuggling which could jeopardize the realization of customs revenue target.
In view of the foregoing, the foremost economist canvassed: “The CPPE strongly appeals to the CBN to peg the customs duty exchange rate at N1000/$ for the rest of the year in line with the federal government’s commitment to ease the current hardships on the citizens and the burden on businesses.
“The current customs duty exchange rate of N1488.9/$ is still too high in the context of the current galloping inflation and difficulties facing businesses and the citizens. Instances of abandoned cargo are on the increase as a consequence of escalating trade cost. These are not good outcomes for an economy seeking to ensure recovery, drive growth, promote inclusion and guarantee social stability.
“Businesses are currently grappling with multiple macroeconomic and structural headwinds which are negatively impacting profitability, competitiveness, job creation, retention of existing jobs and business sustainability”, Yusuf added
The CPPE’s boss stressed that pegging the customs duty exchange rate would resonate with the present intervention measures to mitigate the current hardships in the country, adding that the Centre’s proposition does not any way detract from the economic reform agenda of the present administration.
He predicted that if anything, it would complement the economic transformation measures because of the expected positive impact on competitiveness, productivity, cost reduction, deceleration of inflation and employment generation.
