Reps urge CBN to maintain exchange rate of N951.94/$1

Elizabeth AtimeFebruary 15, 20244 min

The lawmakers urged the CBN to maintain the system exchange rate for customs and excise duty purposes below N1.000/S1 preferably N951.941/$1.

The House of Representatives has called on the Central Bank of Nigeria (CBN) to devise means to keep the system exchange rate preferably at N951.94/$1 to encourage patronage in Nigerian ports and control prices of goods and services.

Consequently, the lawmakers urged the CBN to maintain the system exchange rate for customs and excise duty purposes below N1.000/S1 preferably N951.941/$1 to encourage patronage in Nigerian ports to prevent galloping inflation, aiming to balance economic stability with competitiveness in the global economy.

They also called on the Federal Ministry of Finance and the Apex Bank to provide adequate notice to stakeholders in the maritime industry and the general public before altering customs exchange rates. Adding that “it will ensure transparency and allow stakeholders to prepare for any changes that may affect their operations.”

These resolutions were sequel to the adoption of a motion on the “Need to rescue the Nigerian economy from imminent collapse and restore investors’ confidence in the system” brought by Rep. Leke Abejide (ADC, Kogi) 

In his lead debate, Abejide noted that “The conventional fiscal policies require a minimum of 90 days to manifest, in contrast to the current trend in Nigeria where immediate enforcement is prevalent, thus necessitating the need for a shift towards a collaborative approach which integrates fiscal and monetary policies with stakeholder’s engagement to prevent isolation and guarantee active stakeholders’ involvement in consequential decisions.”

He also stressed that “The CBN has raised customs tariffs six times in the past six months, causing inflation and disrupting import and excise duty calculations, which businesses rely on for business planning.

The businesses and investors rely on a stable transactional exchange rate for import and excise duty calculations for at least two years to enable effective business planning.”

“The House is alarmed that the Central Bank of Nigeria experienced a series of exchange rate adjustments for customs duties within six months, in 24 June 2023, the rate increased from N422.30/$1 to N589/$1, followed by N770.88/$1 on July 6, 2023, N783.174/$1, on November 14, 2023. N951.941/$1 on December 7, 2023, and a double-adjustment on February 2 and 3, 2024, reaching N1,356.833/$1 and N1,413.62/$1 respectively, illustrating excessive fluctuations and volatility in the currency market, raising significant concerns about business planning and economic stability.”

He further expressed concern about the frequent high Customs exchange rate.

“Nigerian importers are shifting towards ports in Tema, Ghana, Lome, Togo; and Cotonou, Benin Republic, causing a substantial 65 percent decrease in cargo importation and business activities at Nigerian seaports, with daily container examinations dropping from approximately 250 to just about 80.”

The Kogi lawmaker further expressed concern that the current system in Nigeria which relies on a market-based exchange rate for calculating Customs duties, causes fluctuations based on market conditions, And this he said “poses significant predictability and stability challenges for businesses, thus necessitating alternative solutions for customs duties by considering options like a fixed-rate system or a hybrid system combining market-based and fixed elements to enhance predictability and stability.”

The motion was unanimously adopted when the presiding officer Speaker Tanjudeen Abbas put the question as the House mandated the Finance Ministry to implement the international best practice of allowing a 90-day grace period for fiscal policy changes to facilitate the completion of ongoing transactions under existing policies. 

Additionally, the House mandated the Committees of Customs and Excise, Finance and Banking Regulations to interface with the Minister of Finance, the CBN Governor, and the Comptroller General of the Nigeria Customs on how fixed exchange rate for Customs and Excise duties will work for the system to boost exports and encourage patronage in the nation’s ports.

Elizabeth Atime

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