The Centre for the Promotion of Private Enterprise (CPPE) has expressed concern that the frequent changes in the customs duty exchange rate have become a huge burden on the business community.
The organized private sector (OPS) advocacy group, in a Note issued on Wednesday by its Chief Executive Officer, Dr Muda Yusuf, noted that the inconsistency in the customs duty exchange rate had led to high volatility in cargo clearing costs, worsening inflationary pressures and aggravating investment risk, especially in the real sector of the economy.
Yusuf pointed out that these frequent changes were profoundly detrimental to production, planning and other real sector activities in the Nigerian economy.
According to him, in the first quarter of this year, there were changes in the customs duty exchange rate twenty-eight times. In April, the frequency of changes would be close to ten times or even more. As at 1st May 2024, the rate has jumped to N1373.65/$. It was less than N1200/$ few days before.
He further clarified: “It is extremely difficult for investors to plan under these unstable circumstances. The situation has introduced an unprecedented level of uncertainty and unpredictability to the international trade dynamics. Investment risk has become elevated, planning has become difficult, risk management has become challenging and investors’ confidence is being weakened.
“It is double whammy for investors to grapple with volatility in the foreign exchange market and contend, concurrently, with high level of unpredictability in the international trade ecosystem. This is not consistent with our growth aspirations at this time”, the CPPE boss added.
Yusuf stated that the CPPE was, therefore, appealing to the CBN to adopt a framework to minimize volatility in the customs duty exchange rate in line with the commitment of the present administration to bolster investors’ confidence and drive economic growth.
He maintained that such framework should adopt a quarterly customs duty exchange rate, after due consultation with the fiscal authorities.
Specifically, he stated that the Centre proposed a commencement rate of N1000/$ customs duty exchange rate. Consultation with the fiscal authorities is imperative because of the trade policy implications of such decisions, adding that it is also consistent with the commitment of the present administration to effective coordination between fiscal and monetary authorities.
