By Steve Agbota
The Centre for the Promotion of Private Enterprise (CPPE) has asked the government to ensure stability in the exchange rates as the fluctuating nature, particularly due to sharp depreciations, have adversely affected container traffic activities, causing a slowdown in momentum and tempo in the nation’s ports.
Speaking during a live radio programme on Monday, the Chief Executive Officer of CPPE, Dr Muda Yusuf, called for a comprehensive review of the Central Bank of Nigeria’s (CBN) role in determining Customs duty rates.
On the issue of Customs duty, he advocated revisiting existing laws and arrangements to ensure stability and predictability in the exchange rate on Customs duty.
However, he suggested fixing a permanent Customs exchange rate between N900 and N1,000 to a dollar, for a specified period, such as three months, six months or a year.
According to him, fixing a static Customs duty exchange rate over a period of three months to one year would not only foster economic stability, but also ensure predictability in international trade within the maritime sector.
While emphasising the importance of stability and predictability in international trade, he highlighted the impact of exchange rate fluctuations on import cycles, which can extend up to 60 to 90 days.
He commended recent efforts between the CBN and fiscal authorities but stressed the need for further action regarding Customs duty determination, saying the measure would provide a framework for planning and contribute to lowering the cost of living by reducing inflation.
“The drop in exchange rate is a very good development for imports and for the maritime sector generally. But the impact may not be immediate because if you look at the import cycle sometimes can be up to 60 to 90 days. So, we pray for sustainability of this current trend which is sustained. Then in a matter of some few weeks or months you begin to see the impact on the activities at the port.”
So, it is a very good development.
“But I want to plead that in addition to what is happening, the CBN and the fiscal authorities should revisit the issue of the Customs duty. It is extremely very important. Yes, there may be laws and regulations that say that the CBN should be determining the Customs duty but you make laws for people, you don’t make people for laws. They need to review that law arrangement for stability and predictability in international trade. It is extremely very important.
“The best way to do it is to fix it for probably three months, six months, or even for a year. For this period of time, this is what the exchange rate for the importation of import duty will be. Between N900 and N1,000 will be okay so that people can plan. Apart from that, it will help to bring down the cost of living. This is because the biggest problem we are facing today, apart from the issue of the exchange rate issue, is generally the cost of living and the problem of inflation,” he explained.
He expressed concerns about the current system’s lack of stability, citing past intrusions into trade policy by the central bank.
He stressed the importance of aligning Customs duty exchange rates with market realities to foster stability and predictability in international trade, citing the tariff book as a tool for achieving these goals.
The CPPE boss urged the government to seriously consider fixing the Customs duty exchange rate to enhance economic stability and support its efforts to reduce the cost of living.
He proposed a rate of around N1,000 Naira to the dollar for the next six months as a viable option to promote stability and predictability in international trade.
“The best option is fixing a permanent exchange rate for the Nigeria Customs Service. It’s the best option for stability because essentially, anything that has to do with import and clearance of cargo should even be exclusively fiscal policy matter. But unfortunately, we now have this component of this exchange rate determination by the CBN, which is also creating an issue,” he added.