Reps kick as CBN increases import duty to N1,515/$

In less than one week, the Central Bank of Nigeria (CBN) has raised the exchange rate for imports by 3.18 per cent, rising from N1,481.5 per dollar to N1,515.092 at the beginning of business on Thursday.

This is just as the House of Representatives has decried the frequent changes, proposing a rate of exchange for cargo clearance of less than N1000 to one dollar.

The exchange rate was 2.56 per cent at the start of business on Wednesday and rose from N1,444.6 per one dollar to N1,481.5.

Interestingly, CBN adjusted the rate by 2.18 per cent on Thursday, creating uncertainty in the import and export business.

This has created panic among importers who are not sure of the next line of action by the apex bank in the next 48 hours.

The CBN exchange rate has not been stable since the beginning of February as the apex bank has raised the exchange rate five times in two weeks.

The exchange rate was increased from N1444.56/$1 on Monday, February 12, 2024 to N1,481.482/$1 on Wednesday, February 14, 2024.

The exchange rate was reviewed upward by N36.922 and the adjustment will be the 5th in 12 days and 9th since the beginning of the administration of President Bola Tinubu in May 2023.

Meanwhile, the House of Representatives on Thursday urged the apex bank to maintain the system exchange rate for Customs and Excise duty purposes below N1,000/$1 to encourage patronage in Nigerian ports to prevent galloping inflation and stabilise the economy.

The house said it would be preferable if the exchange rate for Customs and Excise duty is pegged at N951.941/$1.

The house also urged the Federal Ministry of Finance to ensure the international best practice of allowing a 90-day grace period for fiscal policy changes to facilitate the completion of ongoing transactions under existing policies.

The decision of the house followed the adoption of a motion by Rep Leke Abejide (Kogi, ADC) on the need to rescue the Nigerian economy from imminent collapse and restore investors’ confidence in the system.

Moving his motion, Abejide raised an alarm over the astronomical increase in customs tariffs in the past six months.

He said, “The Central Bank of Nigeria has raised customs tariffs six times in the past six months, causing inflation and disrupting import and excise duty calculations, which businesses rely on for business 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 enable effective business planning.

He however decried the CBN’s series of exchange rate adjustments for customs duties within the past six months, adding, “On 24 June, 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, and a double-adjustment on February 2 and 3, 2024, reaching N1,356.833/$1 and N1,413.62/$1 respectively, illustrating excessive fluctuations and volatility in the currency market, raising significant concerns about business planning and economic stability.”

He said due to the frequent customs exchange rate hikes, Nigerian importers are shifting towards ports in Tema, Ghana; Lome, Togo; and Cotonou, Benin Republic, causing a substantial 65% decrease in cargo importation and business activities at Nigerian seaports, with daily container examinations dropping from approximately 250 to just about 80.

The house while adopting the motion mandated its committees on Customs and Excise, Finance and Banking Regulations to interface with the Minister of Finance, CBN governor and Comptroller General of the Nigeria Customs on how to fix exchange rate for Customs and Excise duties that will work for the system to boost exports and encourage patronage in the nation’s ports.