Bleak Christmas for importers,industries as CBN raises exchange rate from  N783/$ to N952/$

Lagos, Nigeria: entrance to the RoRo port - Nigerian Ports Authority - photo by A.Bartel

By Abiodun OBA

Stakeholders have raised concerns that the new FX rate will effectively cause an increase in import duty payable to the NCS and would overall affect prices of goods in the market.

The Public Relations Officer, Tin-Can Island chapter of the Association of Nigerian Licenced Customs Agents (ANLCA), Onome Monije, told newsmen that importers and their agents are going to experience a bleak Christmas owing to the high tariff for clearing goods at the port. She said the increment would affect both vehicle and containerised goods and advised clearing agents to engage their principals to forestall disagreement.

The Public Relations Officer, Association of Registered Freight Forwarders of Nigeria (AREFFN), Taiwo Fatomilola, lamented that the duty on 1×40ft container has increased from N7 million on Thursday, to N9 million after the increase of the exchange rate. He also said there is a N350,000 increase on the duty on each car.

The Vice Chairman of Business Action Against Corruption (BAAC) Integrity Alliance, Lagos, Jonathan Nicol, said the sudden hike in exchange rate for goods clearing will jeopardize shippers’ businesses and definitely increase cost of doing business, which will further induce inflation.

Nicol, who is also the former President, Shippers Association of Lagos (SAL), said the Federal Government, in tackling the issue of foreign exchange rate, is unfortunately driving existing industries into coma, in addition to the cost of diesel, unbudgeted exchange rate, cost of transportation, which will certainly go up, along with the cost of 400 per cent increase in terminal charges, among others.

According to him, more cargo will be diverted to other climes and the nation’s ports will not be as busy as they should have been.

“I also know the government is aware of the inflationary pressure on citizens. Increase of cost of clearing at this time is ill-timed during the Christmas festive period. The government targeted the Christmas rush to make more money through Customs duty, while goods cleared will be difficult to sell.

“We hope this will be the last onslaught of government pressure on importers. Next year, hopefully, things might change for Nigerians as the cost of doing business in Nigeria will be tackled vehemently to restore confidence in our trading public. Imports will reduce drastically, and more industries will close down due to uncontrolled investment uncertainties in the sector,” he stated.

The National President, Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON), Frank Ogunojemite, said from the business perspective, it is sad news to wake up and see the margin of Customs exchange rate move from N783/$ to N951/$, which means that the cost on both import and export will definitely increase.

He said this will also affect the projected amount of the money allocated for such procurement and in return the end users will bear the burden.

Ogunojemite added without any reservation that inflation will take place and possibility for businesses to collapse is higher, thereby creating more unemployment.

“The weakness in people’s purchasing power due to inflation caused by all these incessant increments will aid bribery and corruption or inefficiency at workplaces,” he said.

The Chairman/CEO of St. Rachael’s Pharma, Mr. Akinjide Adeosun, expressed concern that there will be an increase in the price of drugs because the import rate has gone up as over 70 per cent of drugs consumed in the country are imported.

Importers were left stranded as they face more financial pressure to clear their goods at the port as the Central Bank of Nigeria (CBN) raised the exchange rate for importation from N783/$ to N952/$ on Thursday.

The implication is more hardship for Nigerians this yuletide.

This is the fourth time in six months the import exchange rate has been adjusted by the Nigeria Customs Service (NCS) under the President Bola Tinubu ‘Renewed Hope’ agenda after the Service started the implementation of the floating foreign exchange rate regime by the CBN.

The CBN had on June 24, 2023, adjusted the exchange rate from N422.30/$ to N589/$. On July 6, it was re-adjusted to N770.88/$, and again on November 14, it was re-adjusted to N783.174/$, and now a new regime rate of N951.941/$. The new rate was reflected on the Customs portal.

This adjustment in FX rate for cargo clearing at the port, coming a few weeks before the Christmas and New Year celebrations, according to port users, will have a huge impact on the prices of imported goods already being pressured by surging inflation.

Already, prices of goods have increased as well as cost of production, as investors dump the country.

Also, containers are being abandoned at the seaports, causing congestion. The new increment will have the seaports congested with abandoned cargoes as importers and agents will not be able to clear their cargoes.

© 2023, maritimemag. All rights reserved.

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