CBN Adjusts Customs Duties to N1,593.41/$1

The Central Bank of Nigeria (CBN) has adjusted the Custom duties at the nation's seaports and airports from N1,617.96/$1 to N1,593.41/$1, a 1.5% reduction.

Analysts stated that the reduction in Customs duties was due to the naira strengthening against the dollar at the official window over the weekend.

According to data from the federal government's Single Window for Trade on Monday, the exchange rate for clearing cargoes at the seaports is now N1,593.41/$1 against the previous N1617.96/$1, which was said to have changed over the weekend. The reductions showed that N24.55 was reduced from the previous Customs exchange rate.

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Now, importers that opened Form M today must pay less to clear their cargoes as import duties are benchmarked against the dollar.

Also, importers will open Form M at a lower rate than those who opened Form M on Monday, March 18, 2024, according to the apex bank's new directive to Customs to use the rate for submitting Form M to calculate import duties.

Last month, the Centre for the Promotion of Private Enterprise (CPPE)  pleaded with the Central Bank of Nigeria (CBN) to peg the customs duty exchange rate at N1,000 per dollar for the rest of the year in line with the federal government's commitment to ease the current hardships on the citizens and the burden on businesses.

Dr Muda Yusuf, who is the Chief Executive Officer (CEO), told the LEADERSHIP that, 

"The Chamber welcomes the CBN's decision to approve the use of the exchange rate reflected on the import documentation (Form M) at the onset of the import transaction.

"This was a laudable response to the grievances of investors in the economy. This would reduce the current uncertainty around imports and related economic transactions."

He added that there is also the added risk of cargo diversion to neighboring countries and heightened smuggling, which could jeopardize the realization of customs revenue targets.

He added,

"The CPPE strongly appeals to the CBN to peg the customs duty exchange rate at N1000 per dollar for the rest of the year. The rate of N1488.9 per dollar is still too high, given the current galloping inflation and difficulties facing businesses and citizens.

"The number of abandoned cargoes is increasing due to escalating trade costs. These are not good outcomes for an economy seeking to ensure recovery, drive growth, promote inclusion, and guarantee social stability.

"Businesses are currently grappling with multiple macroeconomic and structural headwinds which are negatively impacting profitability, competitiveness, job creation, retention of existing jobs and business sustainability."

According to Yusuf, pegging the customs duty exchange rate resonates with the present intervention measures to mitigate the country's hardships. Besides, this proposition does not detract from the present administration's economic reform agenda.

"If anything, it would complement the economic transformation measures because of the expected positive impact on competitiveness, productivity, cost reduction, inflation deceleration, and employment generation," he added.

Back Story

Last week, the naira gained 0.95%  as the dollar was quoted at N1,602.75 on Friday, March 15, stronger than N1,617.96 quoted earlier on Monday, March 11, the beginning of the trading week, at the official FX market, according to the data compiled from the FMDQ Securities Exchange.

According to recent predictions, the naira is expected to stabilise this week, following different moderations from the Central Bank of Nigeria (CBN) that have reduced the pressure on demand following the decline in dollar supply.

Last week, the foreign exchange (FX) market closed positively as the local currency appreciated against the dollar in the official and parallel markets.

The naira gained 0.5% on Friday last week as the dollar was quoted at N1,602.75, stronger than its opening for the week at N1,617.96, quoted on Monday at the official FX market. This revelation was compiled from data from the FMDQ Securities Exchange.