The Nigerian Customs Service, based on a directive by the Central Bank of Nigeria, has on several occasions announced import duty rates, with each time, a hike in the amount to be paid by the importers. The service says the rate is based on the exchange rates.
For the records, the clearance rate has gone up several times since this administration came into office. On June 24, 2023, the duty rate went up from N422.30/$ to N589/$. It followed this up with another adjustment barely 12 days away, on July 6, 2023, to N770.88 per dollar.
Still, on November 14, 2023, the rate was adjusted to N783.174/$, in December it was adjusted to N951.941/$, on February 2, it was moved to N1, 356.883/$ and on February 3, it was moved to N1, 413.62/$, later, it was adjusted to N1,417.635/$ then N1,493.23/$ and now, N1604.08.
This has raised some questions; How does the government expect to encourage businesses if this continues? What messages would the central bank be sending to the business community if, on the one hand, it gives the impression that it is fighting the parallel market, while on the other it is predicating its policies on the rates in that market? This is a reprehensible duplicity, for a strategic institution such as the central bank.
This question must be answered because it touches on the fundamental principles on which the current administration is conducting its monetary policies; the unification of exchange rates in the economy. It is interesting to note that this rate adjustment came amid efforts by the CBN to strengthen the value of the naira against other currencies.
The CBN has made strenuous efforts to convince bewildered Nigerians that the power of the naira would rise, yet that is not happening. To encourage businesses and even to raise the revenue the country really requires, it would make better sense if the duty rates were such that more people would be able to bring in goods and actually clear them.
Therefore, to allow the duty rates to be based on the current exchange rate is counter-productive and something should be done about it. What these rates churned out by the CBN do, is discourage importers.
The lack of stability in the rates is not good for businesses and the nation’s economy in general. With these changes in the rates, importers as well as the consuming public cannot plan.
The central bank must come up with a rate that is relatively constant that both businessmen and consumers can work with.
Without a doubt, the government is taking advantage of Nigeria’s high dependence on importation, a situation that borders on an inelastic demand for foreign goods.
With this impression, the government believes that its revenue from these imports remains invariant with the level of taxes it imposes on these foreign goods.
Yet, the government must also know that there is an optimum level to which it can push these things before its actions begin to produce negative consequences. These new rates will result in increases in the cost of doing business, given the high import dependency of the Nigerian economy.
It is also relevant here to point out to the government that the issue of efficiency is key in the process of revenue generation. Therefore, while the government is justified in trying to genuinely raise revenue to execute its projects, the process of doing this must be efficient and seen to be so.
In a situation such as the one that Nigeria is currently facing, there is the need for Neo-liberal policies that entail cuts in taxes, rather than raising them. Therefore, we ask: what policies is the government implementing now?
Prices have risen astronomically, yet there seems to be no end in sight to the suffering of the masses because the policies being implemented by the government are not helping the matter.
Now, with the new duty rates, the naira has effectively been further devalued. The point should be clear to the authorities that these hap-hazard approaches to governance and policy-making cannot yield any positive results.
This administration needs to, as a matter of urgency tell Nigerians where it is headed. The government tells Nigerians that things will get better, but their activities and current outcomes do not synchronise with this promise.
So, they need to convince Nigerians on how they intend to achieve the various promises they are making to Nigerians. For now, they must do something about the import duty rates.
