CBN’s Exchange Rate Determination for Importation is an Intrusion into Trade Policy, CPPE Warns

The Centre for the Promotion of Private Enterprise (CPPE) has warned that the Central Bank of Nigeria’s (CBN) determination of the exchange rate for importation is an intrusion into trade policy. The group argued that the CBN’s role should end with the opening of Form M for importers within the framework of the existing foreign exchange policy.

According to the CPPE, matters pertaining to international trade should fall under the jurisdiction of the Federal Ministry of Finance and the Federal Ministry of Trade and Investment, as these institutions are legally responsible for trade policy.

“We are dealing with two separate issues here. One is about foreign exchange policy, the other is purely a trade policy matter. The responsibility of the CBN should end at the point of opening of Form M for importers within the context of extant foreign exchange policy,” said the CPPE.

The group also pointed out that there may be a need to amend the Customs Act to address this issue permanently. “Meanwhile, in order to permanently address this matter, it might be necessary to amend the Customs Act to move the responsibility of determination of applicable exchange rate for import duty payment to the fiscal authorities. This is necessary to bring such rates in alignment with the extant trade policy direction of government and remove the current avoidable uncertainty around international trade.”

The CPPE also lamented that Nigeria risks further loss of cargo to neighbouring countries over a high exchange rate for import duties collection by the Nigeria Customs Service (NCS). According to the statement, the risk of cargo berthing in neighbouring countries could negatively impact the revenue generation drive of the federal government.

The statement reads, “The high and volatile exchange rate for import duty assessment is fuelling the already high inflation, increasing production and operating costs for manufacturers and other businesses, worsening the cost-of-living crisis, putting maritime sector jobs and investments at risk and weakening investors’ confidence. There is also the added heightened risk of cargo diversion to neighbouring countries and smuggling which could jeopardize the realization of customs revenue target.”

The CPPE further reiterated its appeal to the Presidency to set the customs duty exchange rate at N1000/$ for the next six months through an Executive Order. It noted that the recommendation aligns with the federal government’s current efforts to ease the hardships faced by citizens and businesses.