CBN Increases Customs Exchange Rate Six Times in Eight Months

Findings by Shipping Position Daily have revealed that between June 2023 and February 2024, the Central Bank of Nigeria (CBN) implemented six consecutive increases in the exchange rate applicable for payment of Customs duty.

 Shipping Position Daily recalls that the first adjustment came in June 2023 when the exchange rate jumped from N422.30/$1 to N589/$1.

Afterwards, it became more intermittent as follows:

July 6^th 2023: Just a month later, in July 2023, the exchange rate was further increased from N589/$1 to N770.88/$1.

November 14^th 2023: The trend continued in November 2023, with another hike pushing the rate from N770.88/$1 to N783.174/$1.

December 7th 2023: December witnessed yet another adjustment, as the exchange rate soared from N783.174/$1 to N951.941/$1.

February 2^nd 2024: In February 2024, the CBN implemented the fifth increase within eight months, raising the rate from N951.941/$1 to N1,356.883/$1.

February 3^rd 2024 (Second Increase): Additionally, in the same month, barely 24hrs after the increase in February the exchange rate saw a subsequent increase, reaching N1,413/$1, marking the sixth adjustment within this eight-month period.

These frequent adjustments have sent shockwaves through various sectors of the economy, leading to heightened concerns among stakeholders about the sustainability of such policies and their broader implications for economic stability and growth.

For instance, a comparative survey of prices of food stuffs and household items carried out by our correspondent revaeled the tangible effects of inflation on everyday life. Staple items like rice, beans, and bread have seen substantial price hikes, ranging from 20% to 40%, while cement prices have surged by over 40%. These increases erode the purchasing power of consumers, pushing more people into poverty and exacerbating social inequalities.

Our correspondent further gathered that he incessant rise in customs exchange rates orchestrated by the CBN has plunged Nigeria into a cycle of economic uncertainty and hardship. This is even as stakeholders have blamed the lack of transparency and consultation in implementing these policies. The stakeholders called for coordinated efforts to address these systemic issues in other to restore stability to the economy.

In a chat with our correspondent; Mr Ayo Suleiman; a clearing agent and Special Adviser to the President of the Association of Nigeria Licensed Customs Agents (ANLCA), noted that owing to the incessant increase in customs exchange rate, many of the RoRo terminals are now desolate, while informing that vehicle imports have dropped by 50% since December 2023 and currently hovering at 30%,

He said terminals that were once bustling with activities are now near-empty, while blaming the exorbitant exchange rate that makes importing vehicles financially unviable.

He said this not only cripples businesses, q also leaves abandoned vehicles all over the ports, further hindering trade flow.

“Vehicle importation as of last year December dropped by 50%, now it has dropped to about 30% now you can see Customs is trying to give incentives on values and duty on imported vehicles called Tokunbo

For them to have gone that extra mile, it’s obvious that if you enter some of the terminals now, it is looking like a football field, go to Grimaldi, go to Five Star, you will see for yourself how empty some of them now looks”.

Speaking also, the National Secretary, National Association of Government Approved Freight Forwarders (NAGAFF); Igwe Kingsley lamented that the incessant increase in Customs exchange rate by the CBN has led to high cost of commodities in the market, more poverty and more suffering for the masses.

He pointed out the inevitable rise in commodity prices, exacerbating poverty and suffering among the populace. Moreover, Kingsley underscored the adverse impact on Nigeria’s logistics performance index, as unpredictable clearance processes hamper trade facilitation and compliance with international agreements such as the World Trade Organization (WTO) treaty signed in 2017.

“The incessant increase in Customs duty will lead to high cost of commodities in the market, more poverty, more suffering. It’s very simple. Its common sense, isn’t it? High logistic cost (as a matter of fact) is one of the things that even make Nigeria Logistic Performance Index (LPI) because when one cannot be able to predict the likelihood of clearing his or her goods, you can’t actually estimate and you can’t predict, it becomes difficult.

“That is one element of LPI that has been affected. Then two, not obeying the World Trade Organization agreement is another area where this increment defaults. So it shouldn’t have come. We understand the economic situation in the country, but even if it should have come at all, the principles are laid out already. In the international treaty among member countries of the World Trade Organization, Nigeria signed that agreement in 2017”, he lamented.