Business
BUA Foods laments customs FX rate adjustments
BUA Foods Plc, a subsidiary of BUA Group, says planning is becoming difficult due to the incessant adjustments of the foreign exchange rate for import duties by the Nigerian Customs Service (NCS).
Ayodele Abioye, the firm’s managing director, disclosed this at a recent news conference in Lagos.
The NCS adjusted the FX rate for its tariff and duties to N1,515 to the dollar on February 15.
According to data from the federal government’s single window trade portal, the service increased the rate by 59.15 percent relative to the N951 recorded at the beginning of February.
Among other charges, the NCS collects duties levied on imports using FX rates based on the recommendations of the Central Bank of Nigeria (CBN).
The latest adjustment is the sixth in February alone.
Speaking to journalists on the impact of the increases, Abioye said the company is “not immune” from the country’s FX crisis.
“We’re all impacted, like every other business,” the managing director said.
Abioye said global shocks such as COVID-19, the Russia-Ukraine war, and other disruptions in other countries’ socio-political environments, led to supply constraints, “particularly in terms of raw materials”.
This, he said, also impacts the prices of raw materials.
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“The latest kid on the block in our own local economic climate or environment — aside from the fuel subsidy removal which we all know has a direct consequence on transportation and so many other things — is also the issue of the FX,” he said.
“Reality is that we haven’t seen stability. Just within the last week, I think we’ve seen changes in duty exchange rate by customs. Four times they’ve changed the duty exchange rate. And of course, this is making it very difficult for us as a business to even plan.”
Abioye, however, said the organisation is doing its best in terms of managing the fluctuations.
He also said the company is making efforts to keep prices of products low, noting that the firm has been “very deliberate and very intentional in terms of how we transfer pricing and costs to consumers” from inception.
Analysts have warned that continued increases in the FX duty rate would have a detrimental effect on various economic sectors, including manufacturing, energy, and consumer confidence.
Muda Yusuf, chief executive officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE) said it would inflict more pain on the citizens, erode profit margins, reduce purchasing power, and put the survival of businesses at an elevated risk.