Victor EzejaComptroller General of the Nigeria Customs Service (NCS), Adewale Adeniyi, has lamented about the current FX rates system approved by the Central Bank of Nigeria (CBN), saying it has caused disruptions in their services.
Adeniyi, who gave the hint during a press briefing in Abuja on Wednesday said the repercussions of the fluctuating rates have sent concerning signals to our stakeholders, affecting and disrupting activities.
Join our WhatsApp ChannelPrime Business Africa observes that since the foreign exchange reforms introduced by the Federal Government in June 2023, that led to floating of the naira, the exchange rates for calculating import duties at the ports have been fluctuating in line with the official forex rates.
From N422.30/$1, it went up to N589/$1 in June. On July 6, 2023, it was further adjusted to N770.88/$1. By December 2023, it has gone up to N952/$1.
Speaking to newsmen on Wednesday, the Customs boss revealed that the service has had a total of 28 rates directed by the CBN in the first quarter of 2024.
According to him, while 13 different spot rates were recorded in March, February had the highest with 15 due to the fluctuating rates.
Adeniyi said: “As per protocol, the exchange rate utilized by Customs in the clearance of goods via the Nigeria Integrated Customs Information System (NICIS) is based on the rate determined by the Central Bank of Nigeria (CBN).
“In the last quarter, a total of 28 rates were directed by the CBN, ranging from NGN 951.94 per USD 1 in January 2024 to a peak of NGN 1,662.35 per USD 1 in February 2024. While a singular exchange rate of NGN951.94 per USD 1 was maintained in January, February witnessed 15 different spot rates ranging from NGN 951.94 per USD 1 to NGN 1,662.35 per USD 1.
“March saw a total of 13 different spot rates applied, ranging from NGN 1,303.84 to NGN 1,630.16. These fluctuations resulted in an average applied exchange rate of NGN 1,314.03 per USD 1 in the clearance of Customs goods during the quarter.
“The repercussions of these fluctuating rates have sent concerning signals to our stakeholders, affecting and disrupting activities.”
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He observed that beyond the speculation regarding potential gains it may have on Customs’ revenue, “the implications on transaction volumes are significant and outweigh any possible benefits. These concerns are already manifesting in current activities, with the potential for lagged effects in the coming months.”
He disclosed that being mindful of the implications of the import duty FX rate regime on the trading public and the overall economy, the NCS “with the support of the Honourable Minister of Finance, has initiated periodic consultations with the Central Bank of Nigeria (CBN) to mitigate the potential impact of exchange rate fluctuations on import activities.”
The CGC noted that the relative stability in the past days can be attributed to the interventions of the Finance Minister, Wale Edun, and the Governor of the CBN, Olayemi Cardoso.
Importers have on different occasions lamented about the negative impact of the unstable import duty exchange rates on clearance of cargoes at the country’s ports and the consequential effects on costs of goods in the market and the economy at large.
While reeling out the challenges that NCS encountered in the first quarter of 2024, Adeniyi said there was a notable decline in cargo throughput, adding that the volume of transactions handled within the period decreased by 4.89 percent.
He added that moving forward, the NCS is actively implementing various measures to address the challenges.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
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