Brand owners under the aegis, the Lagos Chamber of Commerce and Industry (LCCI) and other business stakeholders including the presidential candidate of the Labour Party (LP) in the last presidential elections, Peter Obi have kicked against the intermittent increase of foreign exchange rate used to fix customs duties.
The Central Bank of Nigeria (CBN), through the Nigeria Customs Service (NCS) has increased within two days, the foreign exchange (forex) rate used to calculate customs duties on imported goods from N1, 537.073, to N1,605.82 to a dollar.
The new hike represents 4.5 per cent increases on import duty in two days. This is the sixth time the CBN has increased import duties this year.
LCCI called on the CBN to stop the upward review of the customs rate and reverse it to a lower rate for the purpose of importation.
In a statement, LCCI Director-General, Dr. Chinyere Almona said this way, importers would be able to charge lower prices for their goods according to what costs they incur on the shipments.
She advised that any fixed rate should be held for a specified time frame (e.g., quarterly) so that people can plan. She stressed that an element of predictability for planning purposes is highly desirable at this time and season.
According to her, LCCI has always advocated that the government should stop subsidizing consumption and invest such funds to subsidize production activities. A relief or palliative through import duties is more impactful as it affects the prices of goods consumed by more people than the transfers of cash to people as palliatives in the recent past.
She noted that having a fixed rate for import duties also helps businesses to plan ahead for their import portfolios.
She stressed that as it is today, if the CBN continues to adjust the Customs Rates according to the current volatility of the exchange rates, businesses would be at a loss about how to plan for the months ahead so CBN needs to fix a rate lower than what it is now and leave it at that rate for the purpose of importation.
Furthermore, she stressed that the Customs Duty Rate, being the rate with which Customs evaluate imports to arrive at duties to pay, is normally affected by the prevalent exchange rates against the Naira.
She said: “While the CBN defends its stand on the point that the Customs Rate is simply following the official exchange rate of the Naira, we at LCCI expect that the CBN will leave this rate at a much more affordable level to at least cushion the pains importers are already suffering in terms of higher import prices due to recent supply chain disruptions caused by the war in Ukraine and more recently attacks at the Red Sea.”
President, Association of Nigerian Customs Agents, Prince Olayiwola Shittu also said the CBN should be concerned with the situation facing Nigerians and the business community before taking decisions that will have far reaching implications on the economy.
“The current decision of the CBN is highly condemnable because the apex bank just increased the duty exchange rate about two days ago. There is no predictability in the market prices and that is not good for the economy and the people the CBN was created to serve,” Shittu said.
Also, Peter Obi, Former Governor of Anambra said the CBN’s decision would cause a serious business challenge and the national business climate is being negatively impacted by the inconsistent in Customs’ duty rates
“Calculating import duty using a rate that is different from the rate in Form M will cause a serious business challenge that results in losses. Worse still, it directly fuels the inflationary spike, which is the basis of the increasing cost of goods and living. Such arbitrary charges will lead to further closure of businesses, and attendant job losses,” he tweeted.
Other stakeholders who spoke with our correspondent urged the Federal Government to address the issues causing the constant depreciation of naira.
An importer, Solomon Agbaje said the depreciation of naira is affecting the import business seriously and urged the CBN to come up with policies that will take the country out of the woods.