Oluyinka Onigbinde
About two weeks after the Central Bank of Nigeria (CBN) announced the unification of all segments of the Nigerian forex market, findings by Shipping Position Daily have revealed that the Nigeria Customs Service (NCS) is yet to reflect the new rate of the Investors & Exporters (I&E) window.
Clearing agents confirmed to our correspondent last week that the Service is still collecting Customs duty payment based on the old rate of N460 to $1.
This has led to a shortfall of over N292 going by the I&E exchange rate window which hit N755 to $1 last Friday.
Recall also that President Bola Tinubu had in his inaugural speech on May 29 2023 declared his government’s decision to unify the exchange rate, replacing the previous multiple exchange rate regime implemented during the administration of former President Buhari by the Central Bank of Nigeria.
President Tinubu highlighted the importance of a unified exchange rate and emphasized the need to redirect funds from arbitrage toward meaningful investments.
Some clearing agents who spoke to Shipping Position Daily also confirmed that the NCS is yet to reflect the new rate on its system, even as many of them expressed fear about the implication of the unified rate on the cost of clearance at the port.
In a chat with our correspondent, the National Publicity Secretary of the Association of Nigerian Licensed Customs Agents (ANLCA) PTML chapter Ayo Sulaimon said although the system is yet to be adjusted to reflect the unified rate, he, however, stated that when implemented, it will affect import duty, shipping company charges among others
He said: “The system is yet to be adjusted to reflect the Presidential Order, but my belief is that definitely there is no how the unified exchange rate will not have effect on import duty, because it will shoot it up and not only that, it would affect few other things on importation like shipping company charges, even on export. It would have its effect on export. So definitely, it will have its effect but we are waiting to see what the CBN will do. Because once it is adjusted, the populace will start to have the feelings that things will definitely go up”.
“Presently it (the duty) is still N460, it has not changed on the Customs platform”, he confirmed.
Speaking also, a chieftain in ANLCA, Pius Ujubuonu said the I&E window rate will lead to so many abandoned cargoes at the port, noting that a lot of people who bided for contract cargoes at the old official rate will not be able to deliver them due to the change in the exchange rate.
According to him, “fiscal policies are usually strenuous. You don’t just come out with a new policy. You woke up in the morning and you changed the fiscal policy. A lot of transactions were conceived at N425 or N422 to $1. Now you wake up one morning and say you now have a single window; that all transactions will be N750 and that is the basis of your transaction. Yes we agree it is a wonderful policy, but it has to be tenured in such a manner that people will be able to adjust themselves”.
Explaining further, he said: “The transactions that came before that pronouncement should have been cleared before you will now say any consignments that came in from this period of time will be this way.
“I have a consignment at hand. In that consignment we did the calculations and everything was about $550 per tonne. Now the consignment has come in and you are now asking me to calculate my duty at 750 Naira per dollar. For a ship load, the difference is about N360 Million. Where is the customer going to get the difference? Who would give it to him? We have not added transportation, work wages, security and every other thing. This is just the landing cost and we know the level of cost attached from the port to the warehouse. If you are talking about N750. With this, a lot of cargoes will be abandoned, especially cargoes that people borrowed money to import”, he said.
Speaking also, the National Secretary of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Mr. Festus Ukwu said the new I&E rate will not just affect the cost of duty payment, but will also lead to so many consignments being abandoned in the port.
He said, “the new exchange rate will affect import duty because if you think about the exchange rate from the bank and the BDCs operators you will see that the bank rate is lower than the black market rate, but since both rate are unified now that means it will affect the cost of duty or clearance. My take is that government should be careful of taking rash decisions because almost every year policy changes and we should not allow the issue of policies summersault because this will not allow manufacturers to make long term plans”.
On his part however, a financial expert and Chief Executive Officer, Center for Promotion of Private Enterprises (CPPE); Dr. Muda Yusuf said the policy is the best decision for the economy, noting that in no distant time, the country will see an appreciation of its exchange rate.
“I don’t think it will really affect cost, that is not correct. The operating or effective exchange rate in the economy today is not N460, it is actually about N700. You can see that even with the unification, the parallel market rate has not changed. You can see that there’s no money because some people are predicting that once they unify the exchange rate in the window the parallel market rate will move, but the parallel market rate will not move. We are seeing a convergence of rate. So, for me, it is good for the economy and it is only a matter of time. We would see an appreciation of the exchange rate as more inflows come in and as CBN from time to time also intervenes in the matter. And when I say CBN to intervene, I am not saying they should go and be shifting the exchange rate. They should also sell government-owned Forex at the market rate and that is even more revenue for government anyway”, he stated.
However, when contacted as to why the Nigeria Customs Service is yet to reflect the new unified exchange rate on its platform, the National Public Relations Officer of the service, Abdullahi Maiwada said the service is only responsible for the implementation of fiscal policies.
He told our correspondent that whatever exchange rate that is communicated to the service is what the service will use, even as he confirmed that the CBN is yet to communicate to the service on the new exchange rate to be used.
“The NCS is only responsible for implementation of fiscal policies, so monetary policies have direct inclination with the responsibility of CBN. Whatever is communicated to us is what we will use as exchange rate. I am sure the CBN is working on unifying the I&E on how it can be flexible for the system. So, anything that has to do with monetary policies is communicated to us for implementation. Whatever is communicated to us is what we will use”, he said.
