Importers and exporters at the nation’s ports are currently counting their losses following the hike in the exchange rate for cargo clearance by the Federal Government through the Central Bank of Nigeria (CBN) from N783/$1 to N951/$1 last Thursday.
In a report by the Nigerian Tribune in Lagos, Mr Olayiwola Shittu, Managing Director/CEO, SKELAS Group, a clearing and forwarding firm, explained that many import and export jobs already paid for are getting Debit Notes from the Nigeria Customs Service (NCS) because of the new CBN Exchange Rate.
According to Olayiwola Shittu, who also doubles as a former National President of the Association of Nigerian Licensed Customs Agents (ANLCA), “Many importers are already in debt as I speak. Many might run out of business because many import and export dealings have been done based on the old Exchange Rate.
“It is troubling because many jobs already concluded are beginning to get Debit Notes from the Customs because these jobs were concluded based on the old rate.
“This has left many people out of business because due to the economic situation, they cannot meet up with the difference incurred due to the sudden change in Exchange Rate.
“It is a deliberate devaluation. Can we say it’s because the Naira is floating that made this to happen? The situation is not funny at all.
“The issuance of Debit Notes by Customs on already concluded jobs due to the sudden change of the Exchange Rate by the CBN is a serious distortion to trade.
“Some Customs Area Controllers have promised to ease the pain that will be suffered by the Importers and Exporters due to this sudden CBN policy. We will like to see how they will do this.”
Also speaking on the development, the National President of the Africa Professional Freight Forwarders and Logistics of Nigeria APFFLON, Chief Frank Ogunojemite urged the government to take proactive measures to address economic stability in the country.
“From the business perspective, it’s a very sad news to wake up and see the margins of Customs exchange rate from 783 -951, which means that the cost on both importations and exportation will definitely increase.
“This will also affect the projected amount of the money allocated for such procurement, and in return, the end users will carry the burden.
“Without any reservations, inflation will take place and possibilities for businesses to collapse is higher and thereby creating more unemployment.
“The weakness in people’s purchasing power due to inflation caused by all these incessant increments will aid bribery and corruptions or inefficiency at work places.
“Government needs to take proactive measures to address economic stability in the country because there might be geometric rise in criminal activities due to businesses shutting down in addition to present high unemployment rates,” the (APFFLON National President explained.
A former president of the National Association of Government Approved Freight Forwarders (NAGAFF), Chief Eugene Nweke, urged Customs to always advise the CBN before policies like hike in exchange rate is carried out.
“Yes, the Customs enforces government policies, but Customs can also advise government.
“It is only Customs that has an Excuse Department, the CBN doesn’t have such, so it’s only Customs that has a data of all the manufacturing companies that have folded up over the years due to this type of policies.
“Going forward, there is need for Customs to be advising government, that’s why the NCS has a Board.
“This policies have led to hyper-inflation over the years. Many companies have folded up and unemployment figures have continued to shoot up,” Chief Nweke explained to the Nigerian Tribune.
Also in a statement by the Director/Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, the group said that the hike in Exchange Rate will worsen the already prohibitive production and operating costs for businesses in the country.
“The recent decision by the Central Bank to increase the customs exchange rate from N783 to N952/$ would worsen the already prohibitive production and operating costs for businesses in the country.
“It would also inflict more pains on the citizens, erode profit margins, reduce purchasing power and put the survival of businesses at an elevated risk. The frequent changes in rates is also creating serious issues of uncertainty for investors and making the international trade process increasingly unpredictable.
“The CBN had on June 24, 2023, adjusted the exchange rate from N422.30/$ to N589/$. On July 6, it was re-adjusted to N770.88/$, and again on November 14, it was re-adjusted to N783.174/$, and now reviewed to N951.941/$.
“Already businesses are contending with an incredibly difficult operating environment arising from severe macroeconomic headwinds. The persistent currency depreciation is making access to intermediate products very difficult for manufacturers, energy cost remains very high, purchasing power is weak, investors confidence is declining and consumer confidence is on the downward trend.
“This is not a good time for the CBN to increase the exchange rate for the computation of import duty and the clearing of cargo by importers. This review will impact the cost of all imports, including raw materials for manufacturers, pharmaceutical products, machineries, energy products, petroleum products and many more. This will make a bad situation worse for investors in the economy. It will worsen the misery of the citizens amid an excruciating inflationary condition.
“The CPPE strongly appeals to the CBN and the Coordinating Minister of the Economy to review the increase. Trade policy measures should not be subjected to the full vagaries of the philosophy of market forces. The CBN should allow for a concessionary rate for the computation of import duty to protect the economy and the citizens from the reality of unbearable inflationary pressures.
“We propose that going forward, CBN should fix the Customs duty rate at 20% less than the official exchange rate in the light of the prevailing harsh economic conditions. The recent review will make the cost of importation through official channels even more prohibitive and this may result in the following unintended outcomes: Greater incentives for smuggling.
“More industries that are dependent on the imported raw materials may shut down. Customs revenue may decline as imports through official channels become difficult, worsening an already bad inflation situation and the welfare conditions of the citizens.
“Heightened corruption vulnerabilities in the international trade ecosystem. Increase in the influx of substandard products amid high and increasing cost of products.
“Paradoxically, only recently, the CBN Governor, at the CIBN dinner, stressed the importance of giving economic policies a human face. He stated among other thing, that “we need to develop stronger frameworks for measuring the human condition and ensure that policy makers and business leaders pay as much attention to these measures as they do to macroeconomic indicators”
“In the light of these realities, the CPPE recommends that the CBN should review its decision to increase the exchange rate for Customs duty computation. The frequency of rate reviews should also be reduced to minimize uncertainty and risk for investors,” the CPPE stated in a statement sent to the Nigerian Tribune Newspapers.
