Stakeholders in the maritime industry have decried the new Customs duty exchange rates, labeling it as oppressive and anti-people
The stakeholders who spoke with The Nation in separate interviews condemned the hike in import duty by the Nigeria Customs Service(NCS), saying it will lead to higher inflation and further weaken the purchasing powers of Nigeria’s impoverished masses.
They emphasised the need to consider economic implications before implementing fiscal and monetary policies, aligning with the Renewed Hope Mantra of President Bola Tinubu’s administration.
The Federal Government had a few days ago, through the Central Bank of Nigeria (CBN) increased the exchange rate for cargo clearance from N952 to N1,356 per dollar. This effectively translates to a spike in payable import duty.
The latest hike is coming weeks after the rate was increased from N783 to N952 per dollar.
It was in November last year that the exchange rate for cargo clearance was raised from N757 per dollar to N783 per dollar, representing a 3.4 per cent increase, and was later raised from N783/$ to N952/$ in December
The former President, Association of Nigerian Licensed Customs Agents (ANLCA), Prince Olayieola Shitti said the increase is bad because it will translate to more money for the Federal Government but more difficulty for Nigerians.
He said: “In layman terms, it simply puts more money into the coffers of Customs and creates an increase in inflationary rate. It is a bad omen for the importers, clearing agents, port users, stakeholders, operators and maritime business.
“As we speak with you, many importers and their clearing agents have several containers and goods to clear from the port that are still there because of the sudden increment.
“Many of us just woke up to this unpalatable rate and up till now, we have not been able to pay because the duty payable just sky-rocketed. So, it has become a big problem for clearing agents and the importers.”
An importer, Gbolahan Adegboyega argued that the new Customs duty regime would further fuel smuggling and the diversion of cargoes meant for the Nigerian market to the ports of neighbouring countries.
“Some cargoes have been trapped at the port and I don’t see how they are going to break even because of the amount they have to pay on them as duty. No importer can break even with this new exchange rate,” he said.
A maritime lawyer, Muhammed Oluwaseyi faulted Customs officials for arbitrary allocation of values to imported items.
According to him: “Nobody is in charge of the ports, nobody is listening to each other, everyone is on their own. If one has a problem with Customs, whom do you go to? The Comptroller-General of Customs is there but he is there in Abuja.”
Oluwaseyi said the import duty hike will not only fuel inflation but accelerate the smuggling of goods across Nigeria’s frontiers.
Findings have shown that the recent hike in Customs duty exchange rate has been met with overwhelming outcry by the stakeholders who spoke with our correspondent.
The Federal Government had on Friday, through the Central Bank of Nigeria raised the exchange rate for cargo clearance from N952/$ to N1.356 per dollar. This effectively translates to a spike in payable import duty.
The Centre for the Promotion of Private Enterprise (CPPE) also expressed grave concerns over the significant upward revision of the exchange rate for import duty computation.
The CPPE’s CEO, Muda Yussuf said the adjustment, soaring from N952 to N1,357, marks a staggering 42.5 per cent increase, a move, he said, that could have profound implications for businesses across all sectors.
Yusuf lamented that the timing of the import duty rate hike, amid the economic challenges, amplifies the difficulties faced by investors, particularly those in the real sector.
He warned that the consequences of this action could exacerbate inflation as production and operating costs escalate.
Yusuf lamented that the ripple effect on the vulnerable segments of the population may further plunge them into poverty, aggravating cost-push inflation.
Yusuf called for a reconsideration of the rate hike by the CBN, emphasising the potential collapse of numerous businesses already teetering on the brink.
Yusuf said he found the policy difficult to justify, especially in the context of the multifaceted challenges businesses currently face.
He said: “The drastic upward review of the exchange rate for the computation of import duty from N952 to N1357 would have a devastating effect on businesses across all sectors. This is a whopping 42.5 per cent increase. This is like the last straw.
“Businesses are yet to recover from the shocks of the new round of currency devaluation resulting from the sudden unification of the exchange rate which has driven the official exchange rate to about N1400.
“It is double jeopardy for the investors across all sectors especially those in the real sector. This action will further fuel inflation as production and operating costs get escalated. The vulnerable segments of the population will be further impoverished as cost push inflation gets exacerbated.
“CPPE appeals to the CBN to reverse this rate hike in the interest of the already impoverished segments of our society and the numerous businesses that are already on the verge of collapse.”
Also, a freight forwarder, Eugene Nweke, expressed reservations about the potential ramifications of the move by the CBN on the nation’s economy.
He highlighted global concerns discussed at the World Economic Forum (WEF) where the drop in global trade volumes during the 2022/2023 period took center stage.
Nweke emphasised the need to consider economic implications before implementing fiscal and monetary policies.
He argued that neglecting these concerns demonstrated poor administrative sensitivity, calling for a systemic reevaluation of monetary policy tools to ensure fair market practices.
Nweke also raised questions about the CBN’s role in duty exchange rate increments, speculating that it might be a deliberate strategy for revenue generation.
He argued that the Coordinating Minister should conduct an unbiased system study within the nation’s international trading climate to provide recommendations for policy reform.
