The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Mr. Muda Yusuf has warned of the dangers surrounding the increase in exchange rate for import duties in the country.
Recall that the Central Bank of Nigeria, (CBN) had on June 24, 2023, adjusted the exchange rate from N422.30 to N589 per dollar.
On July 6, it was re-adjusted to N770.88 to a dollar, and again on November 14, it was re-adjusted to N783.174 and now reviewed to N951.941 against a dollar.
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Yusuf in a statement made available to THE WHISTLER on Sunday, said the move would worsen the already prohibitive production and operating costs for businesses in the country, impact the cost of all imports, including raw materials for manufacturers, pharmaceutical products, machinery, energy products, petroleum products and many more.
“The recent decision by the Central Bank of Nigeria to increase the customs exchange rate from N783 to N952 per dollar would inflict more pain on the citizens, erode profit margins, reduce purchasing power and put the survival of businesses at an elevated risk.
“The frequent changes in rates are also creating serious issues of uncertainty for investors and making the international trade process increasingly unpredictable.
“Already, businesses are contending with an incredibly difficult operating environment arising from severe macroeconomic headwinds.
“The persistent currency depreciation is making access to intermediate products very difficult for manufacturers, energy cost remains very high, purchasing power is weak, investors confidence is declining and consumer confidence is on the downward trend” Yusuf said.
Speaking further, the CPPE boss warned that the increase in import duty will make the cost of importation through official channels even more prohibitive and this may result in unintended outcomes
He said, “ There will be greater incentives for smuggling; more industries that are dependent on the imported raw materials may shut down.
“Customs revenue may decline as imports through official channels become difficult; worsening an already bad inflation situation; worsening an already bad poverty situation and the welfare conditions of the citizens; heightened corruption vulnerabilities in the international trade ecosystem and Increase in the influx of substandard products amid high and increasing cost of products.”
He urged the CBN and the Coordinating Minister of the Economy to review the increase while urging that trade policy measures should not be subjected to the full vagaries of the philosophy of market forces.
“The CBN should allow for a concessionary rate for the computation of import duty to protect the economy and the citizens from the reality of unbearable inflationary pressures.
“We propose that going forward, CBN should fix the customs duty rate at 20 per cent less than the official exchange rate in the light of the prevailing harsh economic conditions” Yusuf said.