The Centre for the Promotion of Private Enterprise (CPPE) has called on the Nigerian government to urgently revisit its customs duty exchange rate policy, citing the negative impact of the current high and unpredictable rates on the economy.
Dr. Muda Yusuf, Director and CEO of CPPE, expressed concerns in an interview with *Daily Independent*, emphasizing that the volatile exchange rate used for import duty assessments is contributing significantly to the country’s inflation crisis. He noted that this situation is driving up production and operating costs for businesses, worsening the cost-of-living crisis, and threatening jobs and investments in the maritime sector.
“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,” Yusuf stated.
Yusuf also warned of the heightened risk of cargo diversion to neighboring countries and increased smuggling activities, which could undermine the government’s customs revenue targets. This, he said, poses serious competitiveness challenges for ethical and compliant investors, who are grappling with elevated costs due to the current exchange rate policy.
In light of these challenges, the CPPE has renewed its appeal to the Nigerian presidency to temporarily peg the customs duty exchange rate at N1,000 per dollar for the next six months, through an Executive Order. This measure, Yusuf argued, would align with the federal government’s commitment to easing the hardships faced by citizens and businesses.
Yusuf also highlighted that the Presidential Committee on Fiscal Policy and Tax Reforms has made a similar recommendation, and the Organised Private Sector (OPS) has strongly advocated for the same adjustment. Currently, the customs duty exchange rate on the Nigeria Customs Service portal stands at N1,578 per dollar, a rate that has been fluctuating almost weekly, creating uncertainty in the investment environment.
Yusuf clarified that this proposed adjustment is not intended to undermine the ongoing foreign exchange reforms but is instead a trade policy matter that should be managed separately from foreign exchange policy. He suggested that the responsibility for determining the customs duty exchange rate should be moved from the Central Bank of Nigeria (CBN) to the fiscal authorities, specifically the Federal Ministry of Finance and the Federal Ministry of Trade and Investment.
“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 the trade policy space which needs to be urgently corrected,” Yusuf added.
To permanently address this issue, Yusuf recommended amending the Customs Act to transfer the responsibility for determining the applicable exchange rate for import duty payments to the fiscal authorities. This would ensure that exchange rates used for customs duties are in line with the government’s trade policy direction and would help eliminate the current uncertainty surrounding international trade in Nigeria.
