Frequent changes in customs duty FX hurting Nigeria’s economy–CPPE

The Centre for the Promotion of Private Enterprise (CPPE) says frequent changes in customs duty FX rate are detrimental to the economy.

On May 1, the Nigeria Customs Service (NCS) adjusted the foreign exchange (FX) rate for import duties to N1,373.64 per dollar.

Customs typically adopt FX rates recommended by the Central Bank of Nigeria (CBN) for import duties based on trading activities in the official forex market.

In a statement on May 1, Muda Yusuf, CPPE chief executive officer (CEO), said these frequent changes are detrimental to production, planning and other real sector activities in the Nigerian economy.

According to Yusuf, these changes have led to high volatility in cargo clearing costs, worsening inflationary pressures and aggravating investment risk, especially in the real sector of the economy.

“In the first quarter of this year, there were changes in the customs duty exchange rate twenty-eight times,” Yusuf said.

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“In April, the frequency of changes would be close to ten times or even more. As at 1st May 2024, the rate has jumped to N1373.65/$. It was less than N1200/$ a few days before.

“It is extremely difficult for investors to plan under these unstable circumstances. The situation has introduced an unprecedented level of uncertainty and unpredictability to the international trade dynamics.

“Investment risk has become elevated, planning has become difficult, risk management has become challenging and investors’ confidence is being weakened.

“It is double whammy for investors to grapple with volatility in the foreign exchange market and contend, concurrently, with a high level of unpredictability in the international trade ecosystem. This is not consistent with our growth aspirations at this time.”

He urged the CBN to adopt a framework to minimise volatility in the FX rate in line with the commitment of the present administration to strengthen investors’ confidence and drive economic growth.

Yusuf said such a framework should adopt a quarterly rate after due consultation with the fiscal authorities, proposing a commencement rate of N1000/$ FX rate.