CBN Raises Customs FX Rate For Import Duties By 19.43% In 1 Week As Naira Depreciates

Customs Exchange Rate For Import Duties Down By 23.8% In 1 Month  

1 month ago
3 mins read

The foreign exchange (FX) rate for calculating import duties by the Nigeria Customs Service (NCS) has dropped by 23.8 per cent in one month.

The slashing of the Customs exchange rate as determined by the Central Bank of Nigeria (CBN) was due to the gradual appreciation of the naira in the foreign exchange market within the last one month.

From N1,624/$1 on 12 March, the rate for clearing goods and import duties assessment dropped to N1,238.17/$1 last week. This is according to data on the Customs Exchange Rate obtained by Prime Business Africa on Wednesday, 17 April 2024, from the single window trade portal of the Federal Government. Since then the Customs duty rate has maintained stability.

This reflects N385.82 or 23.8 per cent drop within the period under review.

From N1,624 on 12 March, the rate dropped to N1,593/$1 on 16 March, then further dropped to N1,572/$1 on 19 March, N1,448/$1 on 23 March, and N1,405/$1 on 27 March. It was again reduced to N1,330.26/$1 on 3 April and remained until 5 April when it further dropped to N1,260.49 per dollar. The Customs duty rate was N1,251.2 per dollar on April 6 and 7, and was further reduced to N1,246.67 and two days later, came down to N1,238.17.

READ ALSO: CBN Raises Customs Duty Rates By 59.1% In 2 Months Amid Naira Depreciation 

This current rate falls below the official foreign exchange market rate between naira dollar. According to the Nigerian Autonomous Foreign Exchange Market (NAFEM) data published on the FMDQ platform, the official rate of exchange closed at N1,148.14 to the greenback on Tuesday, 16 April.

Since the naira started appreciating, it has recorded about 36 per cent gain from about N1,800/$1 to below N1,150/$1.

Since June 2023, the Nigerian Customs Service has continued to adjust its rate for calculating import duties in line with the official exchange rate.

READ ALSO: ‘It’s More Burden On Nigerians’ – Importers Bemoan 200% Spike In Customs Duty

Need To Make Customs Duty Exchange Rate Stable 

The drop in Customs duty rate means that importers who opened form M since the latest rate was adopted, would have a lower tariff in terms of money to be paid for the clearance of goods, compared to those who did it earlier at a higher FX rate.

However, stakeholders have on different occasions lamented that volatility in the FX rates has a significant negative impact on businesses relating to imports.

A freight forwarder at Apapa, Lagos, who didn’t want to be named said the unstable rate makes it difficult for importers to make proper plans on importation and costing, making many of them to abandon their goods at the port when the rate is high.

“Granted that Customs is following the directive of the CBN to adjust import duty rates in line with the official exchange between naira and dollar and other foreign currencies in order to meet their revenue target given by the Federal Government, the system is not conducive for importers,” he stated.

“Now, importers open Form M at different rates due to rising and falling of the import duty rates, and the goods they clear from the ports will end up in the same Nigerian market. It is really worrisome. Now that the rate dropped because the official exchange rate has dropped, many importers who paid earlier at higher rates to clear their goods are at a disadvantage position in terms of cost incurred and how to factor it into their businesses.”

He called on the government to make the rate stable.

Also, the Centre for the Promotion of Private Enterprise (CPPE) has echoed the concerns of stakeholders in the trade sector by calling on the government to ensure exchange rate stability, noting that the manner in which it is fluctuating has adversely affected the rate at which importers clear their goods at the nation’s ports.

The CPPE CEO, Dr Muda Yusuf, who spoke during a live radio programme on Monday, called for a review of CBN’s role in determining Customs duty rates.

Dr Yusuf, who stressed that making the Customs duty exchange rate stable would ensure predictability and proper planning by importers, suggested that the rate should be fixed between N900 and N1,000 to a dollar, for a specified period, such as three months, six months or one year.

Fixing the Customs duty rate over a period of time would not only foster economic stability but also ensure predictability in international trade within the maritime sector.

He further observed that it generally has an impact on the cost of living and inflation in the country as Nigeria operates an import-dependent economy.

“The best way to do it is to fix it for probably three months, six months, or even for a year. For this period of time, this is what the exchange rate for the importation of import duty will be. Between N900 and N1,000 will be okay so that people can plan. Apart from that, it will help to bring down the cost of living. This is because the biggest problem we are facing today, apart from the issue of the exchange rate, is generally the cost of living and the problem of inflation,” Yusuf stated.

Last week, President of the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr. Dele Oye had while commenting on the efforts of the Federal Government through the CBN in curbing activities that impact negatively on the naira’s value, called on the government to start charging import duties in naira rather than dollars for the good of the economy.

 

 

 

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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