Economy
THE Centre for the Promotion of Private Enterprise, CPPE, welcomes the decision of the Central Bank of Nigeria, CBN, to approve the use of the exchange rate reflected on the import documentation, Form M, at the onset of import transaction.
This was a laudable response to the grievances of investors in the economy. This would reduce the current uncertainty around imports and related transactions in the economy.
However, the CBN intervention did not address the bigger and the more troubling issue of the current prohibitive cost of cargo clearance at the ports which had risen by over 40% in the last two months.
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. There is also the added risk of cargo diversion to neighboring countries and heightened smuggling which could jeopardize the realization of customs revenue target.
In the light of this, the CPPE strongly appeals to the CBN to peg the customs duty exchange rate at N1000/$ for the rest of the year in line with the federal government’s commitment to ease the current hardships on the citizens and the burden on businesses.
The current customs duty exchange rate of N1488.9/$ is still too high in the context of the current galloping inflation and difficulties facing businesses and the citizens. Instances of abandoned cargo is on the increase as a consequence of escalating trade cost. These are not good outcomes for an economy seeking to ensure recovery, drive growth, promote inclusion and guarantee social stability.
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.
Pegging the customs duty exchange rate resonates with the present intervention measures to mitigate the current hardships in the country. Besides, this proposition does not any way detract from the economic reform agenda of the present administration.
If anything, it would complement the economic transformation measures because of the expected positive impact on competitiveness, productivity, cost reduction, deceleration of inflation and employment generation.
26th February, 2024.
C.E.
Tags: CBN CPPE
