CPPE Warns: Surge in Import Duty Exchange Rate to N952/$ Threatens Businesses and Deepens Poverty

In a recent development, the Centre for the Promotion of Privat Enterprise (CPPE) has expressed deep concerns regarding the Central Bank’s decision to elevate the customs exchange rate from N783 to N952/$. CEO of CPPE, Dr. Muda Yusuf, emphasized that this move would exacerbate the already challenging production and operating costs for businesses in the country.

Yusuf, in a press statement released by Infostride News, highlighted the detrimental effects of this decision on citizens, predicting a reduction in purchasing power, eroded profit margins, and increased risks to the survival of businesses. The frequent fluctuations in exchange rates, as noted by Yusuf, contribute to uncertainty for investors and add unpredictability to the international trade process.

The timeline of rate adjustments outlined by Yusuf indicates a series of changes by the Central Bank. On June 24, 2023, the exchange rate was adjusted from N422.30/$ to N589/$. Further adjustments occurred on July 6, setting the rate at N770.88/$. Subsequent changes on November 14 saw the rate at N783.174/$, culminating in the recent adjustment to N951.941/$.

The CEO pointed out that the business landscape is already grappling with severe macroeconomic headwinds. Persistent currency depreciation has made access to intermediate products challenging for manufacturers, while energy costs remain high. Weak purchasing power, declining investor confidence, and decreasing consumer confidence further compound the difficulties faced by businesses.

Yusuf argued that the timing of the exchange rate increase for import duty computation and cargo clearance is particularly unfavorable. The CPPE urged the Central Bank and the Coordinating Minister of the Economy to reconsider this decision, emphasizing its potential to worsen the economic situation for investors and citizens alike, especially in the face of excruciating inflation.

The CPPE proposed that trade policy measures should not solely rely on market forces, suggesting a concessionary rate for import duty computation to shield the economy and citizens from unbearable inflationary pressures. Yusuf recommended fixing the customs duty rate at 20% less than the official exchange rate, considering the prevailing harsh economic conditions.

Highlighting the implications of the recent exchange rate review, Yusuf expressed concern that it would make official importation even more cost-prohibitive, potentially leading to increased smuggling and the shutdown of industries dependent on imported raw materials. Customs revenue may decline as imports through official channels become challenging, exacerbating inflation, poverty, and corruption vulnerabilities in the international trade ecosystem.

In light of these challenges, the CPPE, through Infostride News, called for a review of the decision to increase the exchange rate for customs duty computation. Additionally, they recommended reducing the frequency of rate reviews to minimize uncertainty and risks for investors in the economic landscape.