Victor EzejaAs Nigeria Customs Service (NCS) continues to adjust rate for calculating import duty due to fluctuations in the foreign exchange market, economic expert, Dr Muda Yusuf, has warned that it is hurting the country’s economy.
Dr Yusuf, who is the CEO of the Centre for the Promotion of Private Enterprise (CPPE), warned that the volatility of Customs duty exchange rate weakens investor’s confidence in the economy.
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The current administration led by President Bola Ahmed Tinubu has been making frantic efforts to attract foreign investors into the country as part of measures to boost activities that drive economic growth.
As part of revenue generation drive, the Federal Government through the Central Bank of Nigeria (CBN) had some months back instructed the Nigeria Customs Service (NCS) to adjust the rate for calculating import duties at the ports in line with the prevailing foreign exchange rate.
The CPPE CEO observed that NCS had in the first quarter of 2024, adjusted the Customs duty exchange rate 28 times.
Last week, it was less than N1,200/$, but as of yesterday, May 1, 2024, the rate has jumped to N1,373.65/$.
Yusuf said: “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.”
He further warned that the situation is not consistent with the country’s economic growth aspirations at this time.
To minimise the instability in the customs duty exchange rate, the Centre therefore appealed to the CBN to adopt a quarterly review of rates to be decided after due consultations with fiscal authorities.
CPPE also proposed commencement rate of N1000/$ customs duty exchange rate.
“The Centre for the Promotion of Private Enterprise [CPPE] appeals 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. Such framework should adopt a quarterly customs duty exchange rate, after due consultation with the fiscal authorities.
“We propose a commencement rate of N1000/$ customs duty exchange rate.”
It stressed that “Consultation with the fiscal authorities is imperative because of the trade policy implications of such decisions.”
“It is also consistent with the commitment of the present administration to effective coordination between fiscal and monetary authorities,” it added.
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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