By Akpobor Jirue, Lagos
The Centre for the Promotion of Private Enterprise (CPPE) has called on the Federal Government to issue an Executive Order fixing the exchange rate for cargo clearance by the Nigeria customs duty at N1000/$.
The Centre said it is worried over the current customs duty exchange rate N1578/$ on the Customs Service portal prohibitive, stressing that the inconsistency in the exchange rate cargo clearance is inimical to the economic progress of the nation.
CPPE in a statement signed by the Executive Director/CEO, Dr Muda Yusuf on Sunday expressed worries over the delay in addressing what it called, the problem of the prohibitive and unpredictable exchange rate for cargo clearance by the government.
Insisting that failure of the government initiate a major policy adjustment that addresses the cargo clearance is contributing to high cost of goods in the country.
“The high and volatile exchange rate for import duty assessment is fueling the already high inflation, increasing production and operating costs for manufacturers and other businesses, worsening the cost-of-living crisis, putting maritime sector jobs and investments at risk and weakening investors’ confidence,” he stated.
He identified other negative impacts of the issue to include, the heightened risk of cargo diversion to neighboring countries and smuggling which could jeopardize the realization of customs revenue targets. Others are the creation of serious competitiveness challenges for ethical and compliant investors in the economy because of their relatively elevated production and operating costs.
The CPPE therefore appealed “to the presidency to peg the customs duty exchange rate at N1000/$ for the next six months in the first instance through an Executive Order.” Adding that, “This resonates with the current federal government’s commitment to alleviating the current hardships on the citizens and the burden on businesses.”
The noted that its call resonated with the position of the Presidential Committee on Fiscal Policy and Tax Reforms had made similar recommendations. Adding that the Organized private Sector [OPS] had also strongly advocated in the same vein. “The current customs duty exchange rate on the Nigeria Customs Service portal is N1578/$. This rate has been changing almost weekly, which is not good for the investment environment.”
The Centre pointed out that this proposition is without prejudice to the ongoing foreign exchange reforms of the present administration. “Contrary to concerns expressed in some quarters, the adoption of a lower exchange rate for computation of customs duty would not undermine the current foreign exchange reforms. It is not a request for a concessionary exchange rate for forex allocation.
“We are dealing with two separate issues here. One is about foreign exchange policy, the other is purely a trade policy matter. The responsibility of the CBN should end at the point of opening of Form M for importers within the context of extant foreign exchange policy. All other matters relating to international trade should be within the remit of the Federal Ministry of Finance and the Federal Ministry of Trade and Investment. These are the institutions statutorily responsible for trade policy issues.
“The determination of the customs duty exchange rate by the CBN is an intrusion into trade policy space which needs to be urgently corrected.”
The Centre said, “in order to permanently address this matter, it might be necessary to amend the Customs Act to move the responsibility of determination of applicable exchange rate for import duty payment to the fiscal authorities.
“This is necessary to bring such rates in alignment with the extant trade policy direction of the government and remove the current avoidable uncertainty around international trade. This is what our peculiar circumstances demand. It is important to localize and adapt economic policy models to our peculiar circumstances.”