• Saturday, April 20, 2024
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Manufacturers urge CBN to stabilise Customs duty rate

Again, Customs slashes FX duty rate to N1,238/$

Manufacturers in Africa’s biggest economy are urging the Central Bank of Nigeria (CBN) to stabilise the Customs duty rate to help reduce uncertainty and address rising production costs.

They called on the CBN to stop the upward review of the customs rate and fix it to enable businesses to plan, noting that the continuous changes in the rate are also fueling inflation.

The apex bank, through the Nigeria Customs Service (NCS), has increased import duties six times year to date as the foreign exchange rate used to calculate the duty on imported goods continues to fluctuate.

According to Chinyere Almona, director general of the Lagos Chamber of Commerce and Industry, the Customs duty rate, being the rate with which Customs evaluate imports to arrive at duties to pay, is normally affected by the prevalent exchange rates against the naira.

She stated that in recent weeks, the naira suffered a hit against major currencies, falling to as low as N1,900 against the dollar and N2,250 against the pound sterling in the parallel market, saying the volatility recorded with the exchange rates has made the CBN adjust the duty rate up to six times in February alone.

“While the CBN defends its stand on the point that the Customs rate is simply following the official exchange rate of the naira, we at LCCI expect that the CBN will leave this rate at a much more affordable level to at least cushion the pains importers are already suffering in terms of higher import prices due to recent supply chain disruptions caused by the war in Ukraine and more recently attacks at the Red Sea,” she said.

She advised that any fixed rate should be held for a specified time frame to enable manufacturers to plan, stressing that an element of predictability for planning purposes is highly desirable at this time and season.

Similarly, Muda Yusuf, chief executive officer of Centre for the Promotion of Private Enterprise, said the frequency of the upward review is having a serious negative impact on the country’s manufacturing and all other sectors of the economy.

“It is creating a double whammy situation as businesses battle with foreign exchange volatility and coupled with the constant adjustment of the Customs duty rate,” he said.

“It makes planning unpredictable and puts more pressure on manufacturers,” he stated. He added that it is also fueling inflation in the country while calling on the apex bank to reduce the uncertainty for manufacturers and prevent worsening the country’s accelerating inflation rate.

Sola Obadimu, director general of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) said businesses cannot plan under such conditions, noting that the situation is challenging for manufacturers involved in importation activities.

“It is a difficult challenge for manufacturers involved in importation activities because it takes an average of three months to get your imported order and you will have to pay at the current rate,” he said.

He stated that it means in naira terms companies are paying higher Customs duty, noting that customers’ wallets are not elastic to continue to buy at whatever price manufacturers push at them owing to their declining income.

“Companies usually plan for the year but today all that has gone overboard and there is no way you can plan realistically again and that is why multinationals are having problems,” he said.

“Local manufacturers can adapt to some levels but multinationals have higher challenges because they have to take clearance from their head offices overseas.”