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The Central Bank of Nigeria (CBN) has ordered that the rate used by Nigeria Customs should match the information on the importers’ Form M, in response to the exchange rate adjustment occurring more than six times this year.
Forum M is a requirement key to commence the importation process which is used importers or their authorized representative to provide necessary information to the bank for processing. The volatility of the exchange rate, according to analysts and importers, have contributed to the rising cost of living in the country where inflation is in the border of 30 per cent.
This is as the Centre for the Promotion of Private Enterprise(CPPE) has appealed to the Central Bank of Nigeria (CBN) to peg the customs duty exchange rate at N1,000 per dollar 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.
Dr Muda Yusuf, The chief executive officer(CEO) of CPPE stated that the Chamber welcomes 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 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.”
The CBN, in a circular issued by the director, Trade and Exchange Department, Dr Hassan Mahmud, to the Nigerian Customs Service and the general public, said, it noted the concerns of importers of goods and services n the irregular changes in the Import Duty Assessment levies applied by the NCS.
“Therefore, effective 26th February 2024, the closing rate on the date of opening of Form M for the importation of goods and services would be the rates that would apply for the assessment of import duty. This supersedes the requirements of Memorandum 9, J (2) of the Central Bank of Nigeria Foreign Exchange Manual. (Revised Edition), 2018
“While the CBN is mindful of the initial volatility and price distortions in the aftermath of the forex market liberalisation, the Bank is confident that these reforms, would in the medium term, ensure stability in the market and entrench market confidence necessary to attract investment capital for the growth and development of the Nigerian economy.”
Dr. Yusuf stressed that, the CBN intervention did not address the bigger and the more troubling issues of the current prohibitive cost of cargo clearance at the ports which had risen by over 40 per cent in the last two months, saying, 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 noted that there is also added risk of cargo diversion to neighbouring countries and normal smuggling which could jeopardise the realisation of customs revenue targets.
Yusuf said: “the CPPE strongly appeals to the CBN to peg the customs duty exchange rate at N1000 per dollar for the rest of the year. The current customs duty exchange rate of N1488.9 per dollar is still too high in the context of the current galloping inflation and difficulties facing businesses and the citizens.
“Instances of abandoned cargo are on the increase as a consequence of escalating trade costs. 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.”
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