High FX rates could threaten business, boost smuggling, others — CPPE

By Joy Baba-Yesufu

The Centre for Promotion of Private Enterprise (CPPE) has expressed concerns over the prohibitive and unpredictable exchange rate for cargo clearance, which it said is yet to be addressed by the government.
The organisation in a report ‘The need to revisit the policy on custom duty exchange rate’ said that 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.
“There is also the added heightened risk of cargo diversion to neighbouring countries and smuggling which could jeopardize the realization of customs revenue target. This situation additionally creates serious competitiveness challenges for ethical and compliant investors in the economy because of their relatively elevated production and operating costs.
“In light of this, the CPPE is reiterating its appeal 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. This resonates with the current federal government’s commitment to alleviating the current hardships on the citizens and the burden on businesses.
“It gratifying that the Presidential Committee on Fiscal Policy and Tax Reforms had made similar recommendation. The Organized Private Sector [OPS] had also strongly advocated in the same vein,” Muda Yusuf, the chief executive officer, CPPE said.
According to Yusuf, the current customs duty exchange rate on the Nigeria Customs Service portal currently at N1578/$ is unstable and unfavourable for the investment environment.
He also noted that the proposition was 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.”