The Central Bank of Nigeria (CBN) on Tuesday morning raised the exchange rate for computing Customs duties at the nation’s seaports by 4.6 percent.
The Customs exchange duty rate was reviewed upward from N1, 440.121/$ to N1, 506.352/$ on Tuesday, February 27, 2024, according to the information on the official trade portal of the Nigeria Customs Service.
This represents a 4.6 percent hike when compared to the old rate of N1,440.121/$ used as of Monday, February 26, 2024, and an increase of N66.231 more on a dollar needed to clear goods from the port.
With the apex bank’s policy that Customs should be using the rate on the date of submitting Form M for calculating duties, the adjustment means that importers opening Form M today Tuesday February 27, 2024, for any import trade, will have to look for more money to pay as import duties compared to the importer who opened Form M yesterday February 26, 2024.
Hassan Mahmud, director of the Trade and Exchange Department at the Central Bank of Nigeria, asked Nigeria Customs in a circular at the weekend, to adopt the closing FX rate on the date of opening Form M for the importation of goods, for Import Duty Assessment.
According to him, the use of the rate on Form M for cargo clearing will take effect from 26th, February 2024. He said it will remain valid until the date of termination of the importations and clearance of goods by importers.
“This would enable the Nigeria Customs Service and the importers to effectively plan appropriately and reduce the uncertainties around varying daily exchange rates in determining their revenue or cost structure, respectively,” Mahmud said.
Meanwhile, Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, said the decision to apply the FX rate on form M for calculating import duty is a laudable response because it would reduce the current uncertainty around imports.
He, however, said the apex bank’s intervention did not address the bigger and more troubling issue of the currently prohibitive cost of clearing goods at the ports which had risen by over 40 percent 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,” he said.
Yusuf called for the pegging of FX for paying Customs duty at N1,000 to the dollar to mitigate the current hardship.
