The Nigerian Senate has informed the Nigeria Customs Service (NCS) of a need for a potential upward revision of the agency’s revenue target for 2024.

This move comes amidst growing concerns about the country’s escalating debt and its impact on the cost of living.

In a recent meeting with the House of Representatives Committee on Customs and Excise, Comptroller General Adewale Adeniyi revealed that the NCS generated a total of N3.21 trillion in revenue in 2023, falling short of its targeted sum of N3.67 trillion. This shortfall was attributed to various factors, indicating challenges in meeting ambitious revenue goals.

Chairman of the Senate Committee on Customs, Isah Jibrin, emphasized the need for the NCS to contribute significantly to reducing Nigeria’s debt burden through increased revenue generation. He stated, “Customs is one of the major providers of internally generated revenue, and as it is today, we expect them to play one of the major roles in this drive to reduce our debt burden.”

Jibrin highlighted the importance of customs concessions in sectors such as agriculture and solid minerals to stimulate economic growth. However, he also acknowledged concerns about the high level of unemployment in Nigeria, noting that while the NCS could create some jobs, it cannot address the broader issue of widespread unemployment.

One proposal under consideration is granting waivers to owners of smuggled vehicles to regularize their Customs duties payment. This move aims to provide a window for individuals to comply with regulations, albeit with certain conditions attached.

However, experts and economists are questioning the wisdom of transforming customs into a revenue-generating agency, arguing that such a strategy could have detrimental effects on the economy.

Critics argue that prioritizing customs revenue generation over trade facilitation could have negative consequences for the economy. Economic experts caution that higher customs duties on imported goods could lead to decreased demand, ultimately resulting in lower overall revenue collection for the agency.

Dr. Ifeanyi Okonkwo, an economist, expressed concern over the Senate’s emphasis on revenue generation, stating, “The duty of customs is to facilitate trade, not to generate revenue.” He warned that higher customs duties would inflate prices of imported goods, reducing consumer purchasing power and stifling economic growth.

Furthermore, Okonkwo criticized the lack of foresight among policymakers, describing their approach as “mentally lazy.” He urged the government to focus on policies that promote trade and investment rather than relying solely on customs revenue to address fiscal challenges.

They noted that the impact of higher tariffs on imported goods extends beyond consumer purchasing power. Increased tariffs can also disrupt supply chains and hinder domestic production, particularly in industries reliant on imported raw materials or machinery. Small and medium-sized enterprises (SMEs) may bear the brunt of higher tariffs, as they often lack the resources to absorb increased costs or seek alternative suppliers.

Additionally, higher tariffs can dampen foreign investment by raising the cost of doing business in Nigeria. Foreign companies may reconsider investment plans or seek opportunities in countries with more favorable trade policies, resulting in reduced capital inflows and economic growth.

Addressing the volatility of the naira exchange rate, Adeniyi highlighted the need for coordination between monetary and fiscal authorities to stabilize the currency. He proposed establishing a spot rate for customs duties payment to provide certainty for importers and facilitate better planning.

Stakeholders have emphasized the importance of adopting policies that support long-term economic growth and development. While generating revenue is essential, experts caution against prioritizing short-term gains at the expense of broader economic stability and prosperity.

The debate involves calls to balance fiscal objectives with trade facilitation and economic growth, which requires careful consideration and collaboration between policymakers, industry stakeholders, and experts. Economic experts warned that failure to strike the right balance could have far-reaching implications for Nigeria’s economic prospects and the well-being of its citizens.

In the face of Nigeria’s escalating economic challenges and surging inflation rates, Governor Mohammed Bago of Niger State has imposed a ban on the wholesale purchase of food items at local markets by traders from other states.

This move has ignited a wave of concern and criticism, particularly among the state’s residents already reeling from the burdens of rising living costs and economic instability.

Governor Bago attributed the soaring prices of essential commodities, especially food items, to the influx of traders from neighboring states who descend upon local markets with heavy trucks, exacerbating scarcity and driving prices beyond the reach of ordinary citizens. In response to mounting grievances and protests, he announced an executive order aimed at curbing the activities of what he termed “food speculators.”

“I have decided to issue an executive order effective today to stop food speculators from invading our local markets to mop up our farm produce to other states and neighboring countries, thereby making things difficult for people of the state and Nigeria as a whole,” he stated.

Under the new directive, any truck found purchasing food supplies in bulk at rural markets will face confiscation, with the produce subsequently auctioned off. The governor emphasized the necessity of this measure to alleviate the hardships faced by residents and restore stability to the local food market.

The announcement of the ban follows widespread discontent among the populace, culminating in protests across the state capital, Minna. Demonstrators, predominantly comprising youths and women, voiced their frustration over the escalating cost of living and the perceived failure of the government to address their plight adequately.

On Monday, streets in Minna were flooded with protesters blocking trucks suspected of ferrying food items through the state. Their grievances, echoed by many across the nation, reflect the growing disillusionment with the economic policies and governance under President Bola Tinubu’s administration.

Nigeria has been grappling with a myriad of issues, including declining oil revenues, currency devaluation, and persistent inflation, all of which have taken a heavy toll on the populace.

While Governor Bago justified the ban as a measure to safeguard the interests of local consumers, critics argue that it could exacerbate the very issues it seeks to alleviate. Economists warn that such protectionist measures could distort market dynamics, leading to inefficiencies, reduced competition, and ultimately, higher prices for consumers.

Moreover, the ban risks exacerbating tensions between neighboring states and could have ripple effects on regional trade and economic cooperation. With Nigeria already grappling with economic downturns and strained international relations, such unilateral actions may further isolate the country and impede efforts toward broader economic recovery.

Impact on the Masses Amid Economic Hardship

Nigeria’s economy has been severely strained in recent years, with skyrocketing inflation rates and dwindling purchasing power eroding the livelihoods of millions. The ban on wholesale food sales adds another layer of complexity to an already dire situation, further restricting access to affordable food for vulnerable populations.

The plight of ordinary Nigerians, already burdened by the high cost of living, is exacerbated by the imposition of such restrictive measures. Many families are struggling to put food on the table, with basic necessities becoming increasingly out of reach.

The ban threatens to deepen food insecurity and exacerbate social tensions, particularly among marginalized communities already on the brink of destitution.

As Nigerians grapple with the harsh realities of economic hardship and inflation, Governor Bago’s ban on wholesale food sales, while framed as a measure to protect local consumers, comes with potential long-term consequences. Stakeholders and critics said it underlines the critical state economic hardship has brought to bear upon Nigerians presently, calling for urgent action from the government to address it.

This is a very important observation from the Central Bank of Nigeria: “Another report projects the number of Nigerian students studying abroad to exceed 100,000 by 2022. Given this data, it’s crucial to highlight that between 2010 and 2020, foreign education expenses amounted to a substantial US$28.65 billion, as per the CBNs’ publicly available Balance of Payments Statistics. Similarly, medical treatment abroad has incurred around US$11.01 billion in costs during the same period. Consequently, over the past decade, foreign exchange demand for education and healthcare has totalled nearly US$40 billion.

“Notably, this amount surpasses the total current foreign exchange reserves of the CBN. Mitigating a significant portion of this demand could have resulted in a considerably stronger Naira today,” – Oluyemi Cardoso, Central Bank of Nigeria Governor.

So, if we have great schools and hospitals, Naira will breathe. 

More so, if you focus on the education data, over ten years, close to $30 billion, meaning that we are spending $3 billion yearly on foreign education. This number is more than the total education budget of the federal government which hovers around $2 billion – $2.5 billion yearly. In other words, Nigerians spend more on foreign education than the federal government does in the nation’s educational systems. That is a revelation and shows a total failure in the educational sector in the last decade.

This is a very important observation from the Central Bank of Nigeria: “Another report projects the number of Nigerian students studying abroad to exceed 100,000 by 2022. Given this data, it’s crucial to highlight that between 2010 and 2020, foreign education expenses amounted to… pic.twitter.com/WOFHG7V5b1

— Ndubuisi Ekekwe (@ndekekwe) February 7, 2024