CBN, Customs Plan Fixed Import Duty Exchange Rate

In order to mitigate the ongoing decline in cargo importation resulting from unfavorable exchange rates, the Central Bank of Nigeria (CBN) and the Nigeria Customs Service (NCS) have reached an agreement to establish a stable exchange rate for the importation of goods. This measure aims to facilitate business planning and operations for importers and business owners.

The recent surge in the exchange rate and heightened volatility of the Nigerian naira against the United States dollar have led to a significant decline in the volume of imports through Nigerian ports.

For example, vehicle volume decreased by 45%, container traffic reduced to 30%, and bulk cargo dropped to 20%.

In reference to the recent developments, the Comptroller General of Customs, Bashir Adewale Adeniyi, confirmed the collaboration between the Central Bank of Nigeria (CBN) and the Nigerian Customs Service (NCS). This collaboration is being undertaken in support of the Minister of Finance and Coordinating Minister of the Economy, Wale Edun. The objective of this collaboration is to establish a stable exchange rate for the importation of goods, thereby facilitating effective business planning and operations.

“With the support of the minister of Finance, NCS is working in close collaboration with the Central Bank of Nigeria to achieve a stable rate for import of goods to enable business plan activities,” the Customs CG said.

The managing Director of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, has proposed a temporary fixed Customs exchange rate for cargo clearance. He suggests setting the rate between N900/$ and N1,000/$ for a specified period, such as three months, six months, or a year. This proposal aims to address the challenges faced by importers and exporters due to fluctuations in the exchange rate.

In Yusuf’s opinion, establishing a fixed exchange rate for cargo clearance within a timeframe of three months to one year would not only contribute to economic stability but also provide predictability in international trade within the maritime industry.

Nevertheless, in reference to the aforementioned development, Dr. Kayode Farinto, the former acting president of the Association of Nigerian Licenced Customs Agents (ANLCA), asserted that the sole viable solution to the issue of low cargo volume at the nation’s seaports lies in the implementation of a predictive exchange rate by the Central Bank of Nigeria (CBN) specifically for customs purposes.

In recent months, there has been a notable decline in the volume of cargo shipments in the country, primarily attributed to the fluctuating exchange rate, as stated by Farinto.

“The only solution is for us to have a predictive exchange rate for Customs purposes alone. It’s not too much to ask. We pegged the exchange rate for pilgrims going to Saudi Arabia and Jerusalem during Buhari’s era. Why can’t we do the same for importers?”

“On Wednesday, the exchange rate was N1,474. By Thursday and Friday morning, it has increased. A cent is important to every business man because if you’re using a bank loan you have to put all these into consideration. We had a week where we had more than five exchange rates. That is not too good for our economy. We have three levels of importation.

We have bulk cargo, containerised goods and vehicles. The level of import on vehicles has dropped to about 55 percent, level of import on containers has dropped to about 30 per cent, and on bulk cargo it is about 20 per cent. So we are not really winning the war.

“The situation has not been very rosy for us in the industry particularly the freight forwarders. We are not faring well. We have some people who have actually left the job, some still remain thinking tomorrow will be a better day and we have some who have died. I can tell you that we lost a lot of members this year.

“My prediction is that the volume of imports will continue to nosedive if nothing is done. I’m also an importer. If you want to appreciate what I’m saying, go to the manufacturers’ association and ask them what they have imported in the last few months.”

He noted that the situation has also been difficult for freight forwarders, with many losing their jobs and some even losing their lives.

“Customs must negotiate with the CBN, draw them to the minister of Finance, sit on a round table and involve us. I have suggested a tripartite meeting between CBN, Customs and Ministry of Finance or CBN, Customs and freight forwarders and we will be able to tell the CBN that what they are doing is not helping the economy and if we continue like this, the economy will just go in shambles, perhaps they will listen to us but up till now nothing has been done about it.”

Speaking on the current import situation, a clearing agent named Ikechukwu Anaba has indicated that importers are facing challenges due to the fluctuating exchange rate.

The expert elaborated that bulk cargo imports experienced a notable decline of 20%, while containerized goods witnessed a significant drop of 30%. Notably, vehicle imports were severely impacted, registering a substantial decrease of 55%.

“The unstable exchange rate set by the CBN for payment of import duty will continue to lead to a further drop in cargo volume at the nation’s seaports if the government fails to take prompt action to address the problem.

The economy has been experiencing a decline in cargo volume in recent months, with many importers and clearing agents struggling to cope with the fluctuating exchange rate. The situation has also been difficult for freight forwarders, with many losing their jobs,” Anaba stated.

Anaba, however, suggested fixing a permanent Customs exchange rate for cargo clearance between N800/$ and N1,000/$, for a specified period, such as three months, six months, or a year.

He suggested that establishing a fixed exchange rate for cargo clearance over a period of three months to one year would not only promote economic stability but also ensure predictability in international trade within the maritime sector.

July 01, 2024