The House of Representatives on GM Thursday urged the Central Bank of Nigeria to maintain the system exchange rate for Customs and Excise duty purposes below N1,000/$1 preferably N951.941/$1.
The lawmakers said this will encourage patronage in Nigerian ports to prevent galloping inflation, aiming to balance economic stability with competitiveness in the global.
The advice was given following the adoption of a motion sponsored by Hon. Leke Abejide (ADC, Kogi).
In adopting the motion, the House also urged the Federal Ministry of Finance and Central Bank of Nigeria to provide adequate notice to stakeholders in the maritime industry and the general public before altering customs exchange
rates.
This ensures transparency and allows stakeholders to prepare for any changes that may affect their operations;
It further urged the Federal Ministry of Finance to ensure the international best practice of allowing a 90-day grace period for fiscal policy changes to facilitate the completion of ongoing transactions under existing policies.
It thereafter mandated the joint Committee on Customs and Excise, Finance and Banking Regulations to interface with the Minister of Finance, CBN governor and Comptroller General of the Nigeria Customs on how fixed exchange rate for Customs and Excise duties will work for the system to boost exports and encourage patronage in the nations ports.
Presenting the motion, Hon. Abejide noted that the Central Bank of Nigeria has raised customs tariffs six times in the past six months, causing inflation and disrupting import and excise duty calculations, which businesses rely on for business planning.
He argued that businesses and investors rely on a stable transactional exchange rate for import and excise duty calculations for at least two years to enable effective business planning.
Abejide said he was “Alarmed that the Central bank of Nigeria experienced a series of exchange rate adjustments for customs duties within six months, in 24 June, 2023, the rate increased from N422.30/$1 to N589/$1, followed by N770.88/$1 on July 6, 2023, N783.174/$1, on November 14, 2023, N951.941/$1 on December 7, 2023, and a double-adjustment on February 2 and 3, 2024, reaching N1,356.833/$1 and
N1,413.62/$1 respectively, illustrating excessive fluctuations and volatility in the currency market, raising
significant concerns about business planning and economic stability”
According to him, “Due to the frequent customs exchange rate hikes, Nigerian importers are shifting towards ports in Tema, Ghana; Lome, Togo; and Cotonou, Benin Republic, causing a substantial 65% decrease in cargo importation and business activities at Nigerian seaports, with daily container examinations dropping from approximately 250 to just about 80.
“Concerned that the current system in Nigeria which relies on a market-based exchange rate for calculating
customs duties causes fluctuations based on market conditions, and poses significant predictability and stability challenges for businesses, thus necessitating alternative solutions for customs duties by considering options like a fixed-rate system or a hybrid system combining market based and fixed elements to enhance predictability and stability”.
The motion was unanimously adopted.