Concerned about the increasing impact of fluctuating exchange rates on import duty calculations at the ports, the presidential committee on fiscal policy and tax reforms has recommended that the federal government adopt a fixed exchange rate of N800 per dollar for calculating Customs import duty.
Committee chairman, Taiwo Oyedele, expressed this view in Lagos on Thursday while briefing journalists on the committee’s activities. He emphasized the need for a stable exchange rate to enable businesses to plan effectively, as the current volatility in the foreign exchange market results in frequent changes to import duty rates. “When we prepared the budget, we assumed an exchange rate of N800 per dollar, but it has since risen to over N1,000.
This unpredictability hinders business planning. We propose that the government issues an order fixing the exchange rate for Customs duties at N800 per dollar for the rest of the year,” Oyedele explained.
Following reports of frequent adjustments to the exchange rate for Customs duties by the Central Bank of Nigeria, the committee’s proposal aligns with the views of industry stakeholders who advocate for a hedged exchange rate for Customs duties. Muda Yusuf, director-general of the Centre for the Promotion of Private Enterprise (CPPE), argued that the exchange rate for import duty should fall within fiscal policy purview since it relates to trade.
“Fiscal policy authorities better understand business realities, so they should regulate trade flow by setting the exchange rate for import duty,” Yusuf advocated. He also called for a review of the 2023 Customs Act and quarterly hedging of the exchange rate at N1,000 or N1,100 to protect businesses.
Kingsley Igwe, national secretary of the National Association of Government Approved Freight Forwarders and clearing agents, urged the Central Bank of Nigeria to hedge or benchmark the exchange rate for duty payment, as the fluctuating rate affects investor confidence.
“The unpredictability of clearing costs in Nigeria due to the fluctuating exchange rate for duty payment harms our logistics performance index rating,” Igwe noted. In the first quarter alone, the Central Bank of Nigeria directed 28 different rates for calculating Customs duties, according to Wale Adeniyi, comptroller general of Customs.
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