‘ Using Official Exchange Rate For Duty Computation Undermines Businesses’
THE upward review of official exchange rate being used for the computation of import duty has had devastating effect on businesses across all sectors, according to the Centre for the Promotion of Private Enterprises ( CPPE).
CPPE position is coming following the Central Bank of Nigeria ( CBN), raising exchange rate for the computation of customs duty to N1,356.883 per dollar on Friday.
The latest upward review makes it the second time in less than two months that customs duty would be jacked up as a result of upward review of exchange rate.
Before the new exchange was posted, the CBN on June 24, 2023, adjusted the exchange rate from N422.30/$ 1 to N589/$ 1; on July 6, 2023, it was adjusted to N770.88/$ 1; on November 14, 2023, it was adjusted to N783.174/$ 1; December 7, 2023, it was adjusted to N951.941/$ 1 and currently, it is N1,356.883/$ 1.
The latest duty exchange rate has since been reflected on the Customs’ portal.
The Chief Executive Officer, CPPE, Dr Musa Yusuf said the latest action represents a whopping 42.5% increase. He said: “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.”
Yusuf said 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,” he said.
CPPE boss, therefore, appealed to the CBN to reverse the rate hike in the interest of the already impoverished segments of the society and numerous businesses on the verge of collapsing. “The shocks, disruptions and dislocations are of immense proportions. It is even worse that the rates take immediate effect. This is a policy action that is difficult to justify, especially in the context of the multidimensional headwinds that businesses are grappling with,” he said.
The CPPE recommended that, going forward, the determination of the exchange rate for import duty computation should be treated as a fiscal policy matter that is located within the remit of the fiscal authorities, which is the finance ministry. This, he said, is necessary for proper alignment with extant fiscal policies.