The Centre for the Promotion of Private Enterprise (CPPE) is worried that the problem of the prohibitive and unpredictable exchange rate for cargo clearance is yet to be addressed by government. In a statement CPPE CEO, Dr Muda Yusuf said it is a major policy adjustment that needs to happen to complement current measures in addressing the current cost-of-living crises in the country.
He lamented that the high and volatile exchange rate for import duty assessment is fueling the already high inflation, increasing production and operating costs for manufacturers and other businesses, worsening the cost-of-living crisis, putting maritime sector jobs and investments at risk and weakening investors’ confidence.
According to him, the heightened risk of cargo diversion to neighboring countries and smuggling which could jeopardize the realization of customs revenue target. This situation additionally creates serious competitiveness challenges for ethical and compliant investors in the economy because of their relatively elevated production and operating costs.
In the light of this, CPPE urged the Presidency to peg the customs duty exchange rate at N1000 per dollar for the next six months in the first instance through an Executive Order. He stressed that it resonates with the current federal government’s commitment to alleviating the current hardships on the citizens and the burden on businesses.
Read Also; Five Nigerians celebrities who are twins
He said: “It gratifying that the Presidential Committee on Fiscal Policy and Tax Reforms had made similar recommendation. The Organized private Sector (OPS) had also strongly advocated in the same vein. The current customs duty exchange rate on the Nigeria Customs Service portal is N1, 578 per dollar. This rate has been changing almost weekly, which is not good for the investment environment.
“It is important to clarify that this proposition is without prejudice to ongoing foreign exchange reforms of the present administration. Contrary to concerns expressed in some quarters, the adoption of lower exchange rate for computation of customs duty would not undermine the current foreign exchange reforms. It is not a request for a concessionary exchange rate for forex allocation.
“We are dealing with two separate issues here. One is about foreign exchange policy, the other is purely a trade policy matter. The responsibility of the CBN should end at the point of opening of Form M for importers within the context of extant foreign exchange policy. All other matters relating to international trade should be within the remit of the Federal Ministry of Finance and the Federal Ministry of Trade and Investment. These are the institutions statutorily responsible for trade policy issues.
“The determination of the customs duty exchange rate by the CBN is an intrusion into trade policy space which needs to be urgently corrected.”
While calling for a permanent solution in order to permanently address the impasse, he canvassed the amendment of the Customs Act and the need to move the responsibility of determination of applicable exchange rate for import duty payment to the fiscal authorities.
He said this is necessary to bring such rates in alignment with the extant trade policy direction of government and remove the current avoidable uncertainty around international trade.
“This is what our peculiar circumstances demands and it’s important to localize and adapt economic policy models to our peculiar circumstances,” Dr Yusuf said.