CBN Reduces Customs Exchange Rate By 2.8%

For the first time since the advent of the administration of President Bola Tinubu, the Central Bank of Nigeria (CBN) has reduced the exchange rate for calculations of Customs Duty rates from N1,515.48 to N1,472.75 to a Dollar.

The reduction is by 2.8 per cent, representing N42.244 margin. The CBN adjusted the Customs exchange rate barely 24 hours after it had increased it to N1,515.48, a move, which triggered backslashes and angry reactions from Nigerians.

LEADERSHIP reports that earlier on June 24, 2023, the CBN adjusted the exchange rate from N422.30/$ to N589/$, and on July 6, 2023, it was adjusted to N770.88/$, on November 14, 2023, it was adjusted to N783.174/$, while in December, 2023, it was further adjusted to N951.941/$.

Also, on February 2, 2024, it was moved to N1,356.883/$ and on February 3, it was raised to N1,413.62/$, on Saturday, February 10, it was changed to N1,417.635/$, on Monday, February 11, it was moved to N1,444.56/$1 and on Wednesday, February 14, the CBN adjusted the exchange rate to N1481.482/$1 and on Thursday, February 15, 2023, it was moved to N1,515.092/$1. However, for the first time, the exchange rate was reduced to N1472.756/$1, thereby making clearing agents to call for further reduction.

Speaking to LEADERSHIP, they argued that the increase in exchange rate will lead to increased inflation and cost of living in the country.  “While some importers have fled, others have stopped importation. I have an importer who told his Shippers not to bring in about 10 vehicles into the country because of the exchange rate fluctuation,” Onome Monije, the Public Relations Officer, Association of Nigerian Licenced Customs Agents (ANLCA), said.

She further stated, “the decrease is a welcome development but we will want it to come to as low as N700. That will make importers plan and there will be more importation. Currently, the port is scanty, it’s now like a football field, no cargo because of uncertainty in the Forex market.”

Also, the Centre for the Promotion of Private Enterprise (CPPE) has urged the Federal Government to peg the exchange rate benchmark for the computation of import duty at N1,000/Dollar.

In a statement signed on Thursday by the Director/CEO of the Centre, Dr. Muda Yusuf, he said that Nigeria’s major inflation drivers were not receding, but if anything, they have become even more intense.

According to the CPPE statement, “Persistent inflationary pressures in the Nigerian economy have continued to be a troubling phenomenon, especially because of the acceleration effect on poverty and deterioration of citizens welfare.

“Purchasing power had continued to slump over the past few months. Headline inflation rose to an all time high of 29.9% in January as against 29.92% in December. Food inflation maintained its uptrend rising to a frightening high of 35.4% in January as against 33.9% in December. Economic growth may remain subdued while the risk of stagflation heightens.

“The exchange rate benchmark for the computation of import duty should be pegged at N1000/dollar. This is necessary to reduce the pressure of escalating costs of cargo clearing and minimise uncertainty in the international trade processes. The policy choice of complete floating of the naira requires a rethink in the light of the current inflationary outcomes, volatility and market imperfections.

“The effects of high energy costs on economic activities are profound. It is very difficult to tame inflation if we do not fix power, logistics and forex issues. Regrettably, there are no quick fixes in these areas. But it is important to prioritise these issues and ensure stability and recovery.”