Barely 24 hours after it increased the Customs exchange rate to N1, 356.883 per dollar on Friday, the Central Bank of Nigeria, CBN, has Saturday morning once again jerked up the rate to N1, 413.62.

The new rate has since been reflected on the Customs trade portal. The increase was vehemently opposed by importers and Customs brokers when it first increased Customs import duty rate by 43 percent on Friday.

Describing the increase as devastating, the Chief Executive Officer of the Centre for the Promotion for Private Enterprise, CPPE, Dr. Muda Yusuf said The drastic upward review of the exchange rate for the computation of import duty from N952 to N1,413.62 would have a negative effect on businesses across all sectors. This is a whopping 42.5% increase. This is like the last straw.

He stated that businesses are yet to recover from the shocks of the new round of currency devaluation resulting from the sudden unification of the exchange rate which has driven the official exchange rate to about N1400.

He said: “It is double jeopardy for the investors across all sectors especially those in the real sector. This action will further fuel inflation as production and operating costs get escalated. The vulnerable segments of the population will be further impoverished as cost push inflation gets exacerbated.

“CPPE appeals to the CBN to reverse this rate hike in the interest of the already impoverished segments of our society and the numerous businesses that are already on the verge of collapse.

“The shocks, disruptions and dislocations are of immense proportions. It is even worse that the rates take immediate effect. This is a policy action that is difficult to justify, especially in the context of the multidimensional headwinds that businesses are grappling with.

“The CPPE recommends that, going forward, the determination of the exchange rate for import duty computation should be treated as a fiscal policy matter and located within the remit of the fiscal authorities which is the finance ministry. This is necessary for proper alignment with extant fiscal policies.

Alhaji Tanko Ibrahim, the National Coordinator of the National Association of Government Approved Freight Forwarders(NAGAFF) told our reporter that the apex bank is not yet done with its fiddling with the Customs exchange rate as it plans to increase it again soon to N1500 per dollar.

”I heard from the grapevine that the CBN plans to push the Customs exchange rate to as high as N1,500 per dollar. That is their target and they are going to do it soon” he claimed.

The agitated stakeholders were still discussing the impact of Friday’s increase before they were once again hit by yet another hike which commentators feared may lead to the collapse of the import business and difficulty of the Nigeria Customs Service to meet its N5.1 trillion revenue target for 2024.

An angry stakeholder who reacted to the latest increase said the development has portrayed the present government as insensitive.

He said: ” The whole situation has given away this government as insensitive to the plight of Nigerians.

“While we are still discussing the implications of Friday’s increase and how it is going to impact the lives of the ordinary Nigerians, this government went ahead to slam yet another increase.

“I don’t know why a government can be so cruel and insensitive the irate freight forwarder lamented.”

immortalcrown:
Raising import duty now means increasing the cost of living.

When I did Economics as a subject in secondary school, I was taught import duty is used to control inflow of foreign goods. That is, low import duty attracts more foreign goods while high import duty discourages patronage of foreign goods.

But today in Nigeria, high import duty does not decrease the demand for foreign goods because consumers in Nigeria refuse to give up on foreign goods. But I don't blame the consumers. The government does not control the standard of local goods. Using local goods is suicidal in Nigeria. Almost everything is faked at traders' backyards.

KillahPriest:
to your credit, you mentioned secondary school. Most of the locally manufactured goods in Nigeria still depend on imported foreign components since you can't have everything you want in one place. I've said it before and I'll repeat myself,, these your people in power are deliberately trying to destroy the economy and that's the only viable excuse for whatever they think they're doing which we're all seeing the effects of. A country can never tax it's already impoverished people out of its financial mess

immortalcrown:
.

But today in Nigeria, high import duty does not decrease the demand for foreign goods because consumers in Nigeria refuse to give up on foreign goods.

DeLaRue:


You think so, but that's not the reality.

There is a pain point at which demand for many imported goods will fall fast. People will simply start buying less and less of them. Whether that pain point is at N1500, N1800, or N2000 to a dollar, I don't know.

But the CBN will have the data. They know. If N1500 doesn't stiffle imports to the level they want, I suspect the CBN will not mind seeing naira close to N2,000 to a dollar.

In some ways, it is to the credit of Mr Tinubu's administration that it is willing to follow this extremely tough path to redirect the economy from import-dependence to greater local production. For a politician facing election in just over 3 years to follow a path that may not show positive results for a few years, it is truly brave.

The Nigerian economy was heading for the rocks after over 40 years of mismanagement. Tough decisions are needed to correct long term over dependence dependence on imports.

That naira/dollar pain point is the point at which local production of certain goods starts becoming more viable than importing the same goods. This should translate to us producing more of what we need locally. This will lead to more job creation, less pressure on the naira, and a stronger, more balanced economy in the long term.

But this approach comes with a lot of economic pain initially, as the country is witnessing now.

That's the theory o.

Whether things happens like that in practice is a different matter, because Nigeria's situation often defy economic theory.

SoNature:
Bola Tinubu has given Yemi Cardoso the opportunity to practice his patchy-patchy voodoo economics! And as for the outcome, your guess is as good as mine! If Emefiele was bad, Cardoso is worse off!

DeLaRue:


You think so, but that's not the reality.

There is a pain point at which demand for many imported goods will fall fast. People will simply start buying less and less of them. Whether that pain point is at N1500, N1800, or N2000 to a dollar, I don't know.

But the CBN will have the data. They know. If N1500 doesn't stiffle imports to the level they want, I suspect the CBN will not mind seeing naira close to N2,000 to a dollar.

In some ways, it is to the credit of Mr Tinubu's administration that it is willing to follow this extremely tough path to redirect the economy from import-dependence to greater local production. For a politician facing election in just over 3 years to follow a path that may not show positive results for a few years, is truly brave.

The Nigerian economy was heading for the rocks after over 40 years of mismanagement. Tough decisions are needed to correct long term over dependence dependence on imports.

That naira/dollar pain point is the point at which local production of certain goods starts becoming more viable than importing the same goods. This should translate to us producing more of what we need locally. This will lead to more job creation, less pressure on the naira, and a stronger, more balanced economy in the long term.

But this approach comes with a lot of economic pain initially, as the country is witnessing now.

That's the theory o.

Whether things happens like that in practice is a different matter, because Nigeria's situation often defy economic theory.

Brendaniel:


Oga it might just lead to Venezuela or Zimbabwe as long as corruption is still in governance and your government officials are living large on the nations funds...

DeLaRue:


You think so, but that's not the reality.

There is a pain point at which demand for many imported goods will fall fast. People will simply start buying less and less of them. Whether that pain point is at N1500, N1800, or N2000 to a dollar, I don't know.

But the CBN will have the data. They know. If N1500 doesn't stiffle imports to the level they want, I suspect the CBN will not mind seeing naira close to N2,000 to a dollar.

In some ways, it is to the credit of Mr Tinubu's administration that it is willing to follow this extremely tough path to redirect the economy from import-dependence to greater local production. For a politician facing election in just over 3 years to follow a path that may not show positive results for a few years, is truly brave.

The Nigerian economy was heading for the rocks after over 40 years of mismanagement. Tough decisions are needed to correct long term over dependence on imports.

That naira/dollar pain point is the point at which local production of certain goods starts becoming more viable than importing the same goods. This should translate to us producing more of what we need locally. This will lead to more job creation, less pressure on the naira, and a stronger, more balanced economy in the long term.

But this approach comes with a lot of economic pain initially, as the country is witnessing now.

That's the theory o.

Whether things happen in practice like I stated above is a different matter, because Nigeria's situation often defy economic theory.

DeLaRue:


You think so, but that's not the reality.

There is a pain point at which demand for many imported goods will fall fast. People will simply start buying less and less of them. Whether that pain point is at N1500, N1800, or N2000 to a dollar, I don't know.

In some ways, it is to the credit of Mr Tinubu's administration that it is willing to follow this extremely tough path to redirect the economy from import dependence to greater local production.

Brendaniel:


Oga it might just lead to Venezuela or Zimbabwe as long as corruption is still in governance and your government officials are living large on the nations funds...