CPPE Tasks FG To Revisit Policy on Customs Duty Exchange Rate

The Centre for the Promotion of Private Enterprise (CPPE) has called on the Federal Government to revisit policy on Customs duty exchange rate.

Director/ Chief Executive Officer of CPPE, Dr. Muda Yusuf, made the call in a statement on Sunday, stressing that the high and volatile exchange rate for import duty assessment is fuelling 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.

Dr. Yusufu said CPPE is worried that the problem of the prohibitive and unpredictable exchange rate for cargo clearance is yet to be addressed by the government.

In his words: “We believe it is a major policy adjustment that needs to happen to complement current measures to address the current cost-of-living crises in the country.

“There is also the added heightened risk of cargo diversion to neighboring 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.

“CPPE thereby reiterated 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, stating that 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. 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.

“It is important to clarify that this proposition is without prejudice to the ongoing foreign exchange reforms of the present administration.”

He explained that contrary to concerns expressed in some quarters, the adoption of lower exchange rate for computation of customs duty would not undermine the current foreign exchange reforms, adding “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.”

He stated further that the responsibility of the Central Bank of Nigeria (CBN) should end at the point of opening of Form M for importers within the context of extant foreign exchange policy, that 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.

According to him, these are the institutions statutorily responsible for trade policy issues, adding that the determination of the customs duty exchange rate by the CBN is an intrusion into trade policy space which needs to be urgently corrected.

CPPE boss mulled that in order to permanently address the 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 government and remove the current avoidable uncertainty around international trade.

“This is what our peculiar circumstances demands. It is important to localize and adapt economic policy models to our peculiar circumstances,” he emphasized.