The Centre for the Promotion of Private Enterprise (CPPE) has made an appeal to the Central Bank of Nigeria (CBN) on Sunday.
The CPPE is urging the CBN to peg the customs duty exchange rate at N1,000 per dollar for the remainder of the year. This appeal aligns with the federal government's commitment to alleviate the economic hardship currently faced by the citizens.
In a statement signed by Muda Yusuf, the director of CPPE, the think tank expressed concern that the current customs duty exchange rate of N1488.9/$ is excessively high, given the prevailing inflation and the difficulties confronting businesses and citizens.
The CPPE commended the decision of the CBN to approve the use of the exchange rate reflected on the import documentation (Form M) at the onset of import transactions. According to the think tank, this decision is a commendable response to the grievances of investors in the economy and would reduce the current uncertainty surrounding imports and related transactions.
However, the CPPE pointed out that the CBN's intervention did not address the larger and more troubling issue of the current prohibitive cost of cargo clearance at the ports, which has risen by over 40 per cent in the last two months.
Yusuf wrote, “The high 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 and putting thousands of maritime sector jobs at risk."
He further highlighted the added risk of cargo diversion to neighbouring countries and heightened smuggling, which could jeopardise the realisation of customs revenue targets. In light of these concerns, the CPPE strongly appeals to the CBN to peg the customs duty exchange rate at N1000/$ for the rest of the year.
Yusuf explained that instances of abandoned cargo are on the rise as a consequence of escalating trade costs. He said, “These are not good outcomes for an economy seeking to ensure recovery, drive growth, promote inclusion and guarantee social stability."
He stressed that businesses are currently grappling with multiple macroeconomic and structural headwinds, which are negatively impacting profitability, competitiveness, job creation, retention of existing jobs, and business sustainability.
Yusuf asserted that pegging the customs duty exchange rate resonates with the present intervention measures to mitigate the current hardships in the country. He added that this proposition does not in any way detract from the economic reform agenda of the present administration. On the contrary, it would complement the economic transformation measures because of the expected positive impact on competitiveness, productivity, cost reduction, deceleration of inflation, and employment generation.