Babatunji Wusu –
After opening Form M, importers can now clear their cargoes for less money because import duty has been cut by 19% in just two weeks, from N1,612/$1 to N1,303/$1. The Nigeria Trade Hub (NTH) cut the import duty seven times, as follows: March 15, 2024: N1,612/$1; March 16, N1,593/$1; March 19, N1,572/$1; March 23, N1,448/$1; March 26, N1,405/$1; March 28, N1,364/$1; and March 29, N1,303/$1.
The Central Bank of Nigeria (CBN) was found to have taken significant steps and reforms to control inflation and stabilize the foreign currency (FX) market, which were responsible for the recent improvement. Customs officers claimed that the fluctuating exchange rate had a detrimental impact on the volume of cargoes at the port since people were no longer importing products, prior to the most recent decline in the exchange rate.
Mr. Jaiyeola Ogamode, Managing Director of Scepter Consult, asserts that as customers would always be responsible for paying the costs, CBN should not have let customs duties to remain floating. He added that neither importers or agents could make plans with the unpredictable exchange rate, which had caused the price of items on the market to increase by 400% in less than six months.
But in the recent two weeks, CBN clarified that it was able to resolve a backlog of foreign exchange forwards above $4 billion, which helped firms domestically and abroad. Ogamode emphasized that the 19% drop in duty was small in comparison to the country’s poverty and hunger, even though the importers would pay less duty on their consignments.
The CBN had stated in a circular that import duty assessments should be based on the foreign exchange rate at the time of importation until the termination date and clearance are finalized, prior to the downward revision of import duties. The statement from the bank read as follows: “The Central Bank of Nigeria has noted the concerns of importers of goods and services regarding the irregular changes in the import duty assessment levies applied by the Nigeria Custom Service following the liberalization of the FX market on the Willing Buyer Willing Seller trading principle.
“These developments have created abnormal increases in the final sale prices of items, which are largely driven by uncertainties, rather than traditional market fundamentals, with implications to near-term inflation trends. They have also further built uncertainties around the pricing structure of goods and services in the economy.”The Nigerian Central Bank desires to advise the Nigeria Custom Service and other relevant parties to utilize the closing foreign exchange rate on the day that Form M is opened for the import of goods as the foreign exchange rate for assessing import duties. This rate is in effect until the date that importers terminate their ability to import goods and clear them.
The CBN’s stance on the acceptance of the closing rate in the official foreign exchange window for import duty, however, was rejected by clearing agents affiliated with the Association of Nigerian Licensed Customs Agents (ANLCA). They said that implementing such guidelines would make the import and export procedures more difficult. Recall that before releasing such a policy, the CBN neglected to confer with the Nigeria Customs Service (NCS) and other pertinent parties, claiming that the policy could not be carried out, as highlighted by the association’s National President, Mr. Emenike Nwokeoji.
He clarified that there would be numerous difficulties in adopting the closing currency rate on Form M, hence it was not conceivable. According to him, if Mr. ‘A’ opens his form M with an exchange rate of N700 to import a mobile phone and Mr. ‘B’ opens his own for N900, both importers will be entering the same market, but when they arrive at the port, the duty payable will differ because there is a set amount of duty per cent that must be paid on the product according to the Nigerian Customs system. Let there be an exchange rate value for planning’s sake.
