In a fervent plea to the Federal Government, the presidential candidate of the Labour Party, Peter Obi, has called for an end to the erratic nature of duty charges imposed by the Nigeria Customs Service.
Through a statement released on his verified X (formerly Twitter) handle, Obi highlighted the adverse impact of inconsistent duty charges on the country’s business environment.
Obi expressed deep concern over the ripple effects of this inconsistency, cautioning that it imperils the overall business climate in Nigeria.
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“The federal government should stop the arbitrary and ever-increasing customs duties as it is now negatively impacting businesses and the cost of items, and this portends a huge danger to the economy,” he warned.
Highlighting the crux of the matter, Obi pointed out the disparity between the exchange rates used during the initiation of importation and those applied upon the arrival of goods in Nigeria.
“A situation where at the point of initiating importation, Form M and other documents related to importation are based on a particular rate of exchange, for example, N1000 to $1, being the prevailing exchange rate at the time which the importer of goods was used to calculate the entire process, from the import initiation to receipt of goods in his warehouse.
“Then suddenly when the goods arrive in Nigeria, and duties are calculated at different rates, say N1400 to $1, it becomes a serious business challenge that results in business losses,” he said.
This discrepancy, he argued, poses significant challenges to businesses, resulting in financial losses and exacerbating inflationary pressures. Moreover, it culminates in business closures and subsequent job losses, compounding the economic woes faced by the populace.
“Worse still, it directly fuels the inflationary spike which is the basis of increasing cost of goods and living. Such arbitrary charges will lead to further closure of businesses, and attendant job losses.
“This is because at the time of the initiation of the business, calculations, including duties, have been made based on the prevailing exchange rate, and the prevailing market prices,” he said.
Obi noted the potential consequences if this issue remains unaddressed, warning that importers may opt for neighboring countries’ ports. Such a shift, he said, could render Nigerian ports underproductive and exacerbate revenue loss, further plunging the economy into a precarious state.
“If this situation is not corrected, our importers may resort to using ports of nearby countries, a situation that will leave our ports under-productive, and further deepen our economy into a worse situation as a result of loss of revenue.”
Furthermore, Obi stressed the imperative of policy consistency, noting that it plays a vital role in economic forecasting and business planning. He lamented the adverse effects of inconsistent economic policies on businesses, citing instances of closures and manufacturing shutdowns attributable to the government’s approach.
The Federal Government, through the Central Bank of Nigeria, has once again adjusted the exchange rate for cargo clearance, setting it at N1,605/$. This decision follows a series of fluctuations in exchange rates over recent months, indicative of a lack of stability in economic measures.
The persistent increase in exchange rates has elicited concern within the business community. From N952/$ in December to the current N1,605/$, the significant fluctuations have engendered uncertainty and disruption in trade activities.
Observations on the Nigeria Customs Service portal confirm the implementation of the new exchange rate, signaling its immediate impact on importers and businesses reliant on international trade.
Obi’s advocacy for consistent policies resonates with numerous stakeholders in the business sector, who view policy stability as indispensable for fostering economic growth and sustainability. He urged the government to prioritize support for businesses, particularly in the manufacturing sector, to mitigate the adverse effects of fluctuating policies on livelihoods and the cost of living.
Nigeria’s grappling with persisting economic challenges, keeping the call for policy coherence and supportive measures for businesses reverberating louder than ever. With the fate of the economy hanging in the balance, experts’ calls for decisive actions to alleviate the burdens faced by businesses and safeguard the nation’s economic future have never been louder.
Moreover, economists have warned that the implications of raising customs duty charges amid a dwindling spending power are dire. As duty charges increase, the cost of imported goods surges, placing additional strain on consumers grappling with reduced purchasing power. This situation compounds inflationary pressures, eroding the value of income and savings for the populace.
Consequently, consumers are compelled to allocate a larger portion of their earnings towards essential goods and services, limiting discretionary spending and hindering economic growth. Moreover, businesses face heightened operational costs, further squeezing profit margins and potentially leading to layoffs or downsizing efforts to remain viable.