The Federal Government of Nigeria has announced an adjustment to the exchange rate hike calculations of import duties by the Nigerian Customs Service (NCS). The rate has been increased from N770.88/$ to N783.174/$, a move that is expected to have significant implications for importers and the broader economy.
This adjustment comes five months after the Central Bank of Nigeria (CBN) floated the Naira. The new exchange rate was officially updated on the NCS portal, providing guidance to importers and clearing agents as they quote prices for new jobs and make payments.
The shift in the exchange rate is attributed to economic challenges arising from certain policies of the new administration, along with trade and fiscal measures on duty rates, tariffs, excise levies, and taxes. These factors have contributed to a 70% decline in importation into the country.
The cost of clearing cargoes in Nigeria is already considered one of the highest in the West and Central African hub, making it more expensive than in neighboring countries. This situation has led to the problem of abandoned and overtime cargo at Nigerian ports, reducing storage capacity.
Adegboyega Oyetola, the Minister of Marine and Blue Economy, expressed concern over cargoes that have been left at the ports for over a decade due to clearance bottlenecks. He noted that some cargoes meant for Nigeria are diverted to neighboring countries with lower clearing costs.
In response to the congestion at Nigerian ports, the NCS has inaugurated a committee aimed at speeding up the decongestion process, particularly concerning overtime cargo. The Comptroller-General of Customs, Adewale Adeniyi, highlighted that the new Customs Act empowers the NCS to dispose of containers that exceed their allotted time within the ports.
According to the Customs Act, disposal of cargo exceeding its allotted time can only occur through a court order, and goods must be disposed of through public auction or tender, widely publicized in advance through national newspapers, television, and the service’s official website.
The decision to increase the duty rate is expected to affect the prices of used (Tokunbo) cars and indirectly impact the prices of Nigerian-used vehicles. It may also lead to higher costs for other imported goods, which could be passed on to consumers.
Stakeholders in the import and export sector have expressed concerns about the continuous depreciation of the Naira and the impact on duty rates. They called for measures to stabilize the currency to alleviate the financial burden on importers and businesses.
As the Customs Service adjusts its rates, importers, businesses, and citizens alike are bracing themselves for the economic consequences of these changes. The increased costs may further challenge the already difficult economic climate, raising concerns about the welfare of the Nigerian population.
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