Manufacturers seek fixed rate for Customs Duty to address inflation

Manufacturers have called for a fixed Customs import duty-exchange rate to combat Nigeria’s rising inflation, currently at 33.02 per cent.

The nation’s inflation spike has been partly linked to the continuous hike in import duty, as the country is largely import-dependent.

The Nigeria Customs Service (NCS) through the Central Bank of Nigeria (CBN) has consistently fixed the exchange rate to reflect the official market rate on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, hence the regular changes in rate which has led to a lot of pricing uncertainties on businesses as well as shutting down of companies.

Dr. Muda Yusuf, CEO, Centre For The Promotion Of Private Enterprise (CPPE) said: “We should have a fixed rate for our Customs import duty. It should be a fixed rate of maximum of N1,000 and let it remain like that for the next six months or a year.”

Yusuf explained that the fixed rate makes the whole system more predictable, reduces uncertainties in commodity pricing, and aligns the country with global trade facilitation.

“Different import duty puts different prices, week in, week out, and it’s not good for business.

“For purposes of trade, let’s stabilise the rate. Our tariff book is a seven-year book. The whole essence is to make trade predictable. We seem not to be following our tariff book on this, and it’s not good for trade,” he revealed.

He lamented that the foreign exchange component for import duty disrupted trade certainty and did not position Nigeria well for global trade.

“We already have enough issues with FX volatility and currency management. For the import duty, we can fix the rate to ensure that international trade is more predictable. A fixed rate will help bring down import costs and help moderate inflation,” he emphasized.

The Director-General of the Manufacturers Association of Nigeria (MAN) Segun Ajayi-Kadir, mni, highlighted that the association was rooting for N800/$ as basis for the import duty calculations.

Ajayi-Kadir disclosed that it would make businesses make proper projections and have a moderate cost of production, which would bring down the cost of the end product.

According to the DG MAN, the association have been engaging the government on this because if we keep having price uncertainties with the import-duty rates, it will be passed to the consumers at higher prices, leading to low sales, adding “the disposable income of Nigerians is low and prices are up”.

Ajayi-Kadir stated further “It will lead to moderate cost of production and raw materials inputs, and it will bring down cost of end products and increase volume of sales. More production and sales mean more revenue for the government and overall moderate inflation.”