The House of Representatives yesterday urged the Federal Government to rescue the economy from imminent collapse and restore investor confidence in the country.
In a resolution during plenary, following a motion by Leke Abejide (ADP, Kogi), the House asked the Federal Ministry of Finance and the Central Bank of Nigeria (CBN) to provide adequate notice to Nigerians, especially stakeholders in the maritime industry, before altering Customs exchange rates.
The Green Chamber said taking such a step would ensure transparency and allow stakeholders to prepare for changes that may affect their operations.
It also asked the CBN to maintain a stable exchange rate for Customs and Excise duties at below N1,000/$1, preferably N951 or N941/$1, to encourage patronage of Nigerian ports and prevent galloping inflation to balance economic stability with global competitiveness.
The House said the Federal Ministry of Finance should ensure the international best practice by allowing a 90-day grace period for fiscal policy changes to facilitate the completion of ongoing transactions under existing policies.
Read Also: Economic hardship: No need for food importation – FG insists
The Green Chamber directed its Committees on Customs and Excise, Finance and Banking Regulations to interface with the Federal Minister of Finance, the CBN governor and the Comptroller General of the Nigeria Customs Service (NCS) on how fixed exchange rate for Customs and Excise duties would work to boost exports and encourage patronage at the ports.
Leading the debate on his motion, Abejide argued that conventional fiscal policies require a minimum of 90 days to manifest, in contrast to the current trend in Nigeria where immediate enforcement is prevalent.
The lawmaker said this necessitates the need for a shift towards a collaborative approach which integrates fiscal and monetary policies with stakeholders’ engagement to prevent isolation and guarantee active stakeholders’ involvement in consequential decisions.
He said the CBN had raised Customs tariffs six times in the past six months, causing inflation and disrupting import and excise duty calculations, which businesses rely on for their planning.
Abejide said businesses and investors rely on a stable transactional exchange rate for import and excise duty calculations for at least two years to ensure effective business planning.
The lawmaker said the CBN experienced a series of exchange rate adjustments for Customs duties within six months: on June 24, 2023, the rate increased from N422.30/$1 to N589/$1, followed by N770.88/$1 on July 6, 2023; N783.174/$1 on November 14, 2023; N951.941/$1 on December 7, 2023; a double adjustment on February 2 and 3, 2024, reaching N1,356.833/$1 and NI,413.62/$1.
He said this illustrated excessive fluctuations and volatility in the currency market, raising significant concerns about business planning and economic stability.
According to him, due to the frequent Customs exchange rate hikes, Nigerian importers are shifting towards Tema port in Ghana; Lome ports in Togo; and Cotonou port Benin Republic.
Abejide noted that the development was causing a substantial 65 per cent decrease in cargo importation and business activities at Nigerian seaports with daily container examinations dropping from approximately 250 to just about 80.
The lawmaker expressed concern that the current system in Nigeria, which relies on a market-based exchange rate for calculating Customs duties, causes fluctuations based on market conditions and poses significant predictability and stability challenges for businesses.
He added that this necessitated alternative solutions for Customs duties by considering several options, like a fixed rate system or a hybrid system that combines market-based and fixed elements to enhance predictability and stability.