The Central Bank of Nigeria (CBN), again raised the Customs duty rate for clearing imported items by 4.5 percent on Wednesday morning, February 21, 2024.
According to data obtained from the Nigerian Customs Service portal, the Customs duty rate was reviewed upwards from N1, 537.073/$ to N1, 605.82/$.
This represents a 4.5 percent increase when compared to the old rate of N1, 537.073/$ and an additional N68.747 on a dollar, meaning that importers would need more money to pay duty today than they did previously.
This is the highest rate the nation’s port industry has witnessed since the Central Bank introduced FX reforms in June 2023 to stabilise the foreign exchange rates.
The rate has changed a dozen times since June 24, 2023, when the CBN adjusted the exchange rate from N422.30/$ to N589/$.
On Friday, February 16, 2024, the CBN reduced the rate to N1,472.756 per dollar, and on Wednesday, February, 21, 2024, it increased it to N1,605.82/$1.
Meanwhile, the incessant increases have impacted negatively on the trade volume at the Nigerian ports as some importers have abandoned their goods at the ports while others have opted for ports in the neighboring countries.
Reacting to the development, Peter Obi, a businessman cum politician, said in a statement on his verified X handle (formerly Twitter) @PeterObi, that high Customs revenues at the expense of the survival of local businesses, employment and reasonable cost of living, were detrimental to the nation’s economy.
According to the former governor of Anambra State, the federal government should stop the arbitrary and ever-increasing Customs duties as it was now negatively impacting businesses and the cost of items in the local market.
Obi wrote: “I wish to urgently call on the Federal Government of Nigeria to end the inconsistency in duty charges as it is affecting the general business atmosphere in the country. The federal government should stop the arbitrary and ever-increasing Customs duties as it is now negatively impacting businesses and the cost of items, and this 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. Such arbitrary charges will obviously lead to further closure of businesses, and attendant job losses. This is because at the time of the initiation of the business, calculations, including duties, have been made based on the prevailing exchange rate, and the prevailing market prices.
“If this situation is not corrected, our importers may resort to using ports of nearby countries, a situation that will leave our ports under-productive, and further deepen our economy into a worse situation as a result of loss of revenue.”
He further disclosed that businesses were dying while manufacturers were shutting down because of the poor and inconsistent economic policies of the government.
“The government should also show consistency in its policies as this will help with economic forecasting and business planning. Businesses are dying and manufacturers are shutting down because of the poor and inconsistent economic policies of the government.
“All efforts of the government should be directed at supporting businesses, especially those in the manufacturing sector, to keep their businesses afloat and keep the economy growing, as the small business sector remains the most critical engine of economic growth.
“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.