CPPE: 42.5% Upward Review of Exchange Rate Computation for Import Duty is Double Jeopardy for Real Sector Operators

Dike Onwuamaeze

The Centre for the Promotion of Private Enterprise (CPPE) has described the recent upward review of the exchange rate for the calculation of import duty from N952 to N1,357 as a double jeopardy for investors in the real sector.
The CPPE added that the upward review might be the last straw that would culminate to total devastation of businesses across all sectors of the Nigerian economy.

The Chief Executive Officer of CPPE, Dr. Muda Yusuf, told THISDAY during the weekend that “the drastic upward review of the exchange rate for the computation of import duty from N952 to N1357 would have a devastating effect on businesses across all sectors.  This is a whopping 42.5 per cent increase. This is like the last straw.

“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.”

Yusuf noted that it is worrisome that this upward review is coming at a period when 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.
The CPPE appealed 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.

Yusuf argued that the shocks, disruptions and dislocations that would follow the review would be of immense proportions for businesses to bear.
He said: “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.”
He argued that the continuous decision by the CBN to increase the customs exchange rate would worsen the already prohibitive production and operating costs for businesses in the country.

It would also inflict more pains on the citizens, erode profit margins, reduce purchasing power and put the survival of businesses at an elevated risk.
According to him, the frequent changes in rates is also creating serious issues of uncertainty for investors and making the international trade process increasingly unpredictable.

He recalled that he CBN had severally increased the rate since June 24, 2023, when it adjusted the exchange rate from N422.30/$ to N589/$. On July 6, it was re-adjusted to N770.88/$, and again on November 14, it was re-adjusted to N783.174/$, and it was reviewed to N951.941/$ in December 2023.