Peter Obi, the Labour Party’s presidential candidate in the last general election, has alerted the federal government that the continuous rise in the exchange rate for cargo clearance is negatively impacting businesses and driving up inflation across the nation.
In a statement issued on Wednesday, Obi implored the government to stop the arbitrary and ever-surging customs duties.
The former Anambra State governor stated that this situation is adversely affecting businesses and the pricing of goods, cautioning that it “portends a huge danger to the economy”
- “A situation where at the point of initiating importation, Form M and other documents related to importation are based on a particular rate of exchange, for example, N1000 to $1, being the prevailing exchange rate at the time which the importer of goods was used to calculate the entire process, from the import initiation to receipt of goods in his warehouse.
- “Then suddenly when the goods arrive in Nigeria, and duties are calculated at different rates, say N1400 to $1, it becomes a serious business challenge that results in business losses. Worse still, it directly fuels the inflationary spike which is the basis of increasing cost of goods and living,” he added.
Impacts of High Rates on Businesses and Manufacturers
Speaking further, Obi appealed to the government for policy consistency, arguing that it would facilitate better economic projections and enable businesses to plan more effectively.
According to him, the inconsistency in import duties is causing businesses to pack up and manufacturers to stop producing.
- “Businesses are dying and manufacturers are shutting down because of the poor and inconsistent economic policies of the government.
- “We cannot afford to target high customs revenues at the expense of the survival of local businesses, employment and reasonable cost of living,” he added.
What you should know
Since the start of the year, the Nigerian Customs Service (NCS) has been progressively increasing its foreign exchange (FX) rate for duties.
- In February alone, the agency has increased the rate six times, reflecting the volatility in the broader FX market.
- Recently, a check of the federal government’s single-window trade portal of the customs service indicates that the former exchange rate of N1444.56 to the USD has been adjusted upwards to N1515.09.
- The Nigeria Customs Service imposes duties on imported cargoes before clearance from the ports. These charges range from 5% to 35% depending on the harmonized commodity and coding system (HS code).
- On February 16, 2024, BUA Foods, Nigeria’s giant consumer goods producer, said the incessant adjustments in the import duty FX rate are affecting its operations, particularly in the importation of raw materials.
- The food producer said the increases are making planning difficult.