• Sunday, December 10, 2023
businessday logo


How FX crisis, high tariff hurt port business

Three banks rake in N390bn on FX reform

The scarcity of foreign exchange and the high Customs tariff payable on imported goods were the challenges that negatively impacted Nigeria’s port business in 2022, according to port users.

They said many importers were forced out of business due to the drop in their purchasing power as it was extremely difficult to raise money to invest in the import business.

Tony Anakebe, a Lagos-based licensed customs agent, said naira devaluation affected every business by fuelling inflation.

According to him, the depreciation of the currency made a lot of importers lose billions of naira as it doubled the money needed to bring goods into the country.

This, Anakebe said, made it extremely difficult to raise money to import raw materials as well as finished and semi-finished goods.

“Nigeria’s exchange rate of naira to dollar increased from a little above N400/$ at the beginning of 2022 to about N740/$ today. There was even a time, the exchange rate grew to over N800/$. This further reduced the purchasing power of importers, leading to declines in the volume of imports,” he said.

Anakebe said cargo throughput in twenty-foot equivalent units reduced drastically in the course of the year and the number of ships coming to Nigerian ports also declined.

He said the introduction of Vehicle Identification Number (VIN) valuation by Nigeria Customs for determining the duties payable on imported used and new cars increased the import duties on cars and resulted in a drop in the volume of cars coming into the country.

“VIN valuation affected many car importers and dealers. Many that could not survive the impact left the business; some still have their imported cars trapped in the port for not having the money to pay duties while those who are still in the business were forced to reduce the volume of cars they bring into the country,” he said.

Pointing out that the introduction of VIN valuation means that duties payable on imported cars come directly from Customs headquarters in Abuja, Anakebe said the increase in duty made many Nigerians unable to buy cheap ‘tokunbo’ cars.

Sunny Ugorji, another licensed customs agent, also blamed the introduction of VIN valuation for the drop in the number of used and new cars brought into the country in 2022.

Read also: Nigeria’s growing FX cartel under CBN’s watch

He said VIN valuation also benchmarked the Customs duty payable on cars coming into the country.

According to him, the port terminals dried up within the year as Customs benchmarked the import duties payable on cars and containers.

“Tariff on containers was also benchmarked. Customs has pegged that every 40-foot container is to pay from N5 million and above while a 20-foot container pays from N3 million and above, depending on the type of goods. Customs must ensure that the importer pays up to that tariff benchmark before the goods can be released to the owner,” Ugorji said.

Aloga Ogbogo, national secretary of the Nigerian Association of Road Transport Owners, said the scarcity of foreign exchange and has affected businesses in the nation’s port industry.

According to him, most of the raw materials that used to come into the country in the form of finished and semi-finished goods declined due to the FX crisis that skyrocketed within the year.

He said the FX crisis in Nigeria is taking a toll on every aspect of port business as many trucks that used to move cleared containers from the ports to the importers’ warehouses were also left without jobs due to a drop in volume.