The Nigeria Customs Service (NCS)’s revenue has grown by 225 percent in five years, driven by naira depreciation and the high FX rate for clearing goods at the port.
So far, Customs has recorded an all-time high revenue of N5.0795 trillion, surpassing its 2024 target of N5.079 trillion, despite low import volume—a major revenue source.
On a year-on-year basis, Nigeria Customs, which generated N1.56 trillion in 2020, grew its revenue by 44 percent to N2.24 trillion in 2021 and by 16 percent to N2.6 trillion in 2022.
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Customs’ revenue continued on a growth trajectory, recording further growth of about 24 percent to N3.21 trillion in 2023 and 58 percent to N5.0795 trillion with one month to spare.
Also, the two major Customs commands Apapa and Tin-Can posted record-high revenue as Apapa Port reached N2.1 trillion between January and November 19, while Tin-Can Island Port collected N1. 046 trillion from January to November 7, amid declining import volume.
The depreciation of naira has been hitting manufacturers who use plenty of naira to chase few dollars needed to import goods. High FX rate for cargo clearing has forced them to spend more naira to clear imported goods.
Businesses, particularly manufacturers and importers of finished goods, are struggling to stay above troubled waters in the 18 months of President Bola Tinubu’s administration due to several economic headwinds resulting from its FX reforms.
This was made worse by the naira float of the Central Banks of Nigeria (CBN), which has led to the use of an unstable FX rate for clearing goods, making it nearly impossible for importers to plan and allocate a budget for restocking inventories.
As the naira receded to N1,687.52 per dollar as of November 11, 2024, from N702.19/$ on June 15, 2023, according to data from the FMDQ, the naira has lost over 140 percent value against the dollar since FX reform in June 2023.
Similarly, the FX rate for computing import duties reached N1,688.284 per dollar as of November 21. Hence, the cost of clearing has risen by 119 percent – from N770.88 to a dollar pre-reform era – since the federal government’s FX reform in July 2023.
“Import duties are too high and we have the problem of exchange rate for clearing of cargo which has amplified the FX problem,” said Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise.
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“People grapple with the FX rate when the goods land because the exchange rate in the open market is used for the computation of import duties.
“That should be corrected. Some of us have been shouting about this but they say it is because of the new Customs Act.”
Faulting the use of rates close to N1,700 to compute import duties, Yusuf said this why commodities are very expensive in the market and people are losing money.
Confirming that naira devaluation has helped Customs in realising its revenue target, Dera Nnadi, the area controller of the command, said the N1. 046 trillion collected in Tin-Can Port is the highest in history.
Acknowledging that the naira devaluation added some impetus to the revenue collection, Nnadi said import volume has dropped significantly as Tin-Can, which cleared about 9,000 containers by this time last year, has only handled about 5,000 containers so far.
“Constant devaluation of our currency is a threat to trade and has been reducing the profit margin of importers. Projections on imports are always faulty because of unstable import policies and we don’t make 10 percent profit from a 40-foot container,” said Jonathan Nicole, immediate past president of the Shippers Association of Lagos State.
Read also: Businesses brace for more naira pain
Commending Customs’ resilience and professionalism, Nicole said realising over N5 trillion revenue shows manufacturers are under serious economic pressure.
“We are losing jobs to Contonu and Togo Ports because policies guiding our domestic ports are too tough for businesses,” Yusuf, earlier cited, said.
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