For port business in Nigeria to witness a positive turnaround that will result in an increased volume of imports and exports, there is a need for the Central Bank of Nigeria to stabilise the exchange rate of the naira to the dollar for clearing goods at the port, analysts have said.
According to them, this will not only help to reduce the burden of paying high tariffs to the Nigeria Customs Service as import duty but also enable businesses to effectively plan for sourcing their inventories and critical production inputs on the part of manufacturers.
Also, port users expect Customs to automate their cargo-clearing procedures through the use of scanning machines rather than physical examination and to adopt a 24-hour cargo-clearing process at all seaports in Nigeria.
“Government needs to stabilise the exchange rate, especially the FX rate for cargo clearing at the port, which makes import duty and tariff high. We have a situation where the exchange rate is changing as if it is a time bomb and is hurting businesses,” Kayode Farinto, a Customs licensed agent, said.
According to him, port users expect the government to allow Customs to have a stable exchange rate for six months whether the dollar goes up or down.
The depreciation of the naira against the dollar on the official and parallel markets in 2023 resulted in several adjustments of the exchange rate for cargo clearing at the port from N422.30/$ at the beginning of President Bola Tinubu’s administration in June to the current N951.941/$.
CardinalStone Research, in a report on Nigeria’s 2024 economic outlook, predicted that by adopting a blend of uncovered interest rate parity and purchasing power parity, there is an expectation that the naira at the official window will cross N1000.0/$ in 2024.
The report said that naira at the official window touched new lows in 2023, reflecting the over 40.0 percent currency devaluation by the CBN and weak FX inflows.
“We are not seeing any serious efforts on the part of the economic managers that will bring down the inflation and alleviate the hardship people are facing. Inflation will continue to rise in the first quarter of the year, and this will continue to hurt businesses,” Tony Anakebe, a Lagos-based Customs licensed agent, said.
According to him, the government needs to plan on how to expand the economy by driving non-oil exports to increase the country’s capacity to earn foreign currency.
He told our correspondent that the nation’s mining industry can drive non-oil exports and create opportunities for the country to earn FX in 2024.
“The government also needs to pay attention to the mining industry because there is a lot of potential in that sector that can help the country to drive exports and earn dollars. There are reported cases of companies operating illegally without licences and the government has to block such leakages,” he said.
He called on the CBN to work towards making dollars available to businesses, especially importers.
Meanwhile, Obi Nwabunwanne, a Lagos-based importer, said there is a need to automate the cargo clearance process by adopting or introducing a single window that will bring Customs and other service providers under one platform to reduce delays and save costs for cargo owners.
“We need the Nigerian Ports Authority’s Port Community System to come on stream to reduce the level of interface between the freight forwarders and the Customs again. We want cargo clearing to be done online,” he added.
Segun Oduntan, vice president of the Association of Nigerian Licensed Customs Agents, urged government agencies to pay more attention to creating export incentives such as grants to drive export growth.
He said the government pays attention to exports by ensuring that the port environment encourages export activities by ensuring that export goods find their way into the ports without delays.
“Our expectations are for the Naira to gain against the US dollar, and we are encouraging our people to embrace export trade. Some of them are already going into agriculture so they can be exporting the produce,” he said.
He called on the government to ensure that the port system operates 24 hours and to ensure that the rail system functions effectively for ease of cargo movement.
