In a recent announcement, the Federal Government of Nigeria has made significant adjustments to the exchange rate calculations for import duties handled by the Nigerian Customs Service (NCS).
According to reports from The Guardian, the exchange rate has shifted from ₦770.88/$ to ₦783.174/$, signifying a noteworthy policy change merely five months after the Central Bank of Nigeria (CBN) introduced the floating of the Naira.
This modification, now reflected on the NCS portal, aligns with the CBN’s recent decision to authorize banks to sell foreign exchange at market-determined rates. The shift towards a single exchange rate regime, in line with President Bola Tinubu’s commitment to fostering economic stability, has, however, contributed to a 70% drop in importation, leading to higher costs for clearing cargoes in Nigeria compared to other African countries.
Addressing concerns regarding congestion at ports, Adegboyega Oyetola, the Minister of Marine and Blue Economy, discussed the issue of abandoned and overtime cargoes in a recent meeting with port stakeholders. To tackle this problem, the Nigerian Customs Service has inaugurated a committee in compliance with the new Customs Act, empowering it to dispose of containers exceeding their allotted time within the ports.
Adewale Adeniyi, the Comptroller-General of Customs, emphasized the primary goal of port decongestion, pledging increased efficiency and trade facilitation. However, this shift poses challenges for importers and clearing agents, who must now adapt to the new exchange rates when quoting for new jobs, potentially leading to increased business costs.
Already, the economic impact is evident, with concerns rising about the effect on the prices of used cars and other goods. As the government aims to boost revenue collection, with the NCS reporting a 66.5% surge in revenue between July and October 2023, industry experts warn that 2024 may bring increased hardships for the masses.
The potential rise in prices and its impact on businesses could lead to discontent, posing challenges for economic players and causing disruptions in various sectors. Analysts argue that the government should demonstrate sensitivity to the challenging economic conditions and consider implementing palliative measures for citizens and businesses.
As stakeholders grapple with these changes, the nation remains watchful of the unfolding economic landscape, with the heightened costs imposed by stringent fiscal policies potentially straining an already delicate economic situation, impacting local and international trade.