The Centre for the Promotion of Private Enterprises (CPPE) is calling on the Central Bank of Nigeria (CBN) to implement measures aimed at stabilizing the exchange rate for customs duty. Dr. Muda Yusuf, Founder of CPPE, emphasized the need for a framework that reduces volatility in the customs duty exchange rate to bolster investor confidence and drive economic growth.
Yusuf highlighted that the frequent changes in the customs duty exchange rate have become burdensome for the business community. These fluctuations have led to increased volatility in cargo clearing costs, exacerbating inflationary pressures and heightening investment risk, particularly in the real sector of the economy. He noted that such instability adversely affects production, planning, and other activities in Nigeria’s economy.
“In the first quarter of this year alone, the customs duty exchange rate changed twenty-eight times. In April, the frequency of changes is expected to be close to ten times or more. As of May 1, 2024, the rate has surged to N1,373.65 per dollar, compared to less than N1,200 per dollar a few days earlier,” Yusuf stated. “Under these unstable circumstances, it is extremely difficult for investors to plan effectively. The uncertainty and unpredictability introduced to international trade dynamics have elevated investment risk, made planning challenging, and weakened investor confidence.”
Yusuf highlighted the double challenge investors face, dealing with volatility in the foreign exchange market and unpredictability in the international trade ecosystem. He proposed a quarterly customs duty exchange rate framework, developed in consultation with fiscal authorities, to provide stability. Yusuf suggested a starting rate of N1,000 per dollar for customs duty exchange.
“Consultation with fiscal authorities is crucial due to the trade policy implications of such decisions. It also aligns with the commitment of the present administration to ensure effective coordination between fiscal and monetary authorities,” Yusuf added.
