CBN raises import duty rate, now N1,444.56/$1

For the 4th time in 10 days, the Central Bank of Nigeria (CBN) has raised the exchange rate for calculating Customs import duties rate at the nation’s seaports.

Information obtained from the official trade portal of the Nigeria Customs Service (NCS) shows that the exchange rate was reviewed upward yesterday, February 12, from N1,417.63/$ to N1,444.56/$1.

For the use of the British pound, the exchange rate was pegged at N1,824.19/£1 while the exchange rate was pegged at N1,556.08/€1 for the Euro.

This year alone, the CBN has adjusted the import duty exchange rate four times in quick succession.

The exchange rate was moved from N951.941/$1 to N1, 356.883/$1 on February 2, 2024, and was again reviewed upward on February 3 to N1, 413.62/$1. Last Saturday, the rate was changed again to N1,417.63/$1 before it was raised on Monday to N1,444.56/$1.

On June 24, 2023, the CBN adjusted the exchange rate from N422.30/$1 to N589/$1, and on July 6, 2023, it was adjusted to N770.88/$1. On November 14, 2023, it was adjusted to N783.174/$1, in December 2023.

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Earlier, Dr. Muda Yusuf, Chief Executive Officer of Centre for the Promotion of Private Enterprise had cautioned that incessant increase in import duty rate would inflict more pain on the citizens, erode profit margins, reduce purchasing power, and put the survival of businesses at an elevated risk.

Yusuf noted that the frequent changes in rates were also creating serious issues of uncertainty for investors and making the international trade process increasingly unpredictable.

“This is not a good time for the CBN to increase the exchange rate for the computation of import duty and the clearing of cargo by importers.

This review will impact the cost of all imports, including raw materials for manufacturers, pharmaceutical products, machinery, energy products, petroleum products, and many more.

This will make a bad situation worse for investors in the economy. It will worsen the misery of the citizens amid an excruciating inflationary condition.

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The CPPE strongly appeals to the CBN and the Coordinating Minister of the Economy to review the increase,” he said.

Yusuf said that trade policy measures should not be subjected to the full vagaries of the philosophy of market forces.

He advised that the CBN should allow for a concessionary rate for the computation of import duty to protect the economy and the citizens from the reality of unbearable inflationary pressures.

“We propose that going forward, CBN should fix the customs duty rate at 20% less than the official exchange rate in the light of the prevailing harsh economic conditions,” he said.

Yusuf noted that the recent review will make the cost of importation through official channels even more prohibitive, and this may result in greater incentives for smuggling, more industries that are dependent on the imported raw materials may shut down, customs revenue may decline as imports through official channels become difficult,

Others according to him include worsening an already bad inflation situation, worsening an already bad poverty situation and the welfare conditions of the citizens, heightened corruption vulnerabilities in the international trade ecosystem and an increase in the influx of substandard products amid high and increasing costs of living.