Frequent changes in customs duty hurting economy — Expert
The CEO of Centre for Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has stated that the instability in customs duty exchange rate has become a huge burden on the business community, leading to high volatility in cargo clearing costs.
In a statement yesterday, Yusuf said the lack of a stable custom duty is worsening inflationary pressures and aggravating investment risk in the real sector of the economy.
While stating that the first quarter of 2024 saw customs duty exchange rate changed 24 times and 10 in April, he said the frequent changes are detrimental to production, planning and other real sector activities in the Nigerian economy.
“As at May 1, the rate has jumped to N1373.65/$. It was less than N1200/$ a few days before.”
“It is extremely difficult for investors to plan under these unstable circumstances. The situation has introduced an unprecedented level of uncertainty and unpredictability to the international trade dynamics. Investment risk has become elevated, planning has become difficult, risk management has become challenging and investors’ confidence is being weakened.”
He noted that it is a double whammy for investors to grapple with volatility in the foreign exchange market.
“They can’t contend with the high level of unpredictability in the international trade ecosystem. This is not consistent with our growth aspirations at this time.”
He, however, appealed to the Central Bank of Nigeria (CBN) to adopt a framework to minimize volatility in the customs duty exchange rate in line with the commitment of the present administration to bolster investors’ confidence and drive economic growth.
“Such framework should adopt a quarterly customs duty exchange rate, after due consultation with the fiscal authorities. We propose a commencement rate of N1000/$ customs duty exchange rate. Consultation with the fiscal authorities is imperative because of the trade policy implications of such decisions. It is also consistent with the commitment of the present administration to effective coordination between fiscal and monetary authorities.”