The pang of hunger ravaging the country is has been given a major boost by the spot rate adopted by the Nigeria Customs Service (NCS) to calculate import duties.
While defending the upward movement of the import rate recently, the Service insisted that it does not fix the rate but simply applies the official exchange rate that is fixed by the Central Bank of Nigeria (CBN).
As of yesterday, the official rate used to calculate import duty was N1,413 to one United States dollar.
Experts argue that the CBN adopting an official rate that is close to the unofficial market rate would stabilise the market in the long run and improve collectable revenue for the government. They also argue that the spot rate is typically determined by the Customs authority based on prevailing market rates.
According to them, the Customs spot rate is crucial in ensuring the accurate valuation of imported goods for clearance purposes. They also maintain that it helps prevent under- or over-valuation of goods, which can have implications for customs duties and taxes owed by importers.
The experts noted that it is important for importers and the Customs authorities to have clear and transparent processes in place for determining and applying the spot rate to ensure fairness and accuracy in customs valuation.
On how the new spot rate will affect the economy especially the poor, Managing Director of a clearing outfit, Derindos Ventures Limited, DerindeAro, argued that it would lead to higher costs of goods especially since Nigeria is an import-dependent country.
“Just a few weeks ago, duties were calculated based on a dollar rate that was below N1,000. At that time, we were crying that the price of commodities was very high. Since last week, the exchange figure moved to N1,413 to the dollar.
“The prices of basic food will go up and they are already going up including foods that are produced locally because Nigeria runs a dollarised economy. Every food on the shelves in major supermarkets is imported. There are school fees that are paid in dollars. The prices of local rice in this country are competing with imported rice. How do we explain that as a people,” he said.
On how Nigeria can use importation to boost economic development, Aro urged the Federal Government to encourage Nigerians to import complete knocked vehicles that can be assembled in Nigeria, saying: “Such vehicles are cheaper to import because they will be assembled here in Nigeria, which will provide jobs for youths. That will reduce unemployment and reduce insecurity that is threatening to ruin the country.”
On his part, the Executive Director, Human Rights Writers Association of Nigeria (HURIWA), Emmanuel Onwubiko, described the new rate as scandalously high, noting that it would inevitably discourage business growth, make the goods virtually unaffordable to the majority of consumers in Nigeria and frustrate businesses that would henceforth require huge volumes of naira to be able to get foreign exchange to import goods.
He further argued that the policy would compound the already extremely high unemployment rate in the country.
“The Central Bank of Nigeria (CBN) ought to be defending the Naira as one of its core mandates, but this current governor of the Bank is out to unleash a series of policies that undermine the value of the national local currency,” he alleged.
He insisted that the policies of the President Bola Tinubu administration appear to be toeing the path outlined by the International Monetary Fund (IMF) and the World Bank, arguing that “these Bretton Wood institutions have increased pressures on the Nigerian government to impose higher taxation and now this.”
He maintained that the new tariffs would not only affect the prices of imported food items but rubbish the ease of doing business initiative that is gradually improving the business atmosphere.
His words: “Of course it will and it is already. This is because when local businesses are encumbered by high exchange rates, it will slow down businesses and for start-ups, this is a crushing initiative that would drive small and medium scale businesses underground.”
Onwubiko does not think the policy would benefit the country in the long term.
He added: “The Central Bank of Nigeria under Mr. Yemi Cardoso has been very unstable and incompetent and has experimented with dozens of policies meant to kill off the naira and almost ‘dollarising’ the local economy as if to say that Nigeria is now a slave to the U.S. and the multilateral funding agencies of World Bank and IMF.”
A lawyer and public analyst, Jide Ojo, flayed the increase in costs of clearing goods, especially food items.
“I do not know exactly what the government wants to achieve by increasing the costs of clearing goods. This will increase the hardship in the country. We can see protests in some parts of the country and this may escalate if the prices of food items do not reduce soon,” he stated.
Ojo held that this is a wrong time for the government to seek to increase its revenue at the expense of the people.
“What is the endgame of increasing government revenue amid misery?” he queried. “The people are poor and getting killed because criminality is on the increase. Kidnapping for ransom is the order of the day and this is causing the people sleepless nights. The people are at the mercy of criminals because the government is unable to protect them. The law is very clear on the duty of a government.
“The primary duty of any government is the protection of the life and property of the people and to improve their welfare. To me, it does appear that the government is failing in the two aspects that are most very critical to the survival of the people.
There is insecurity in the land, which is a primary duty of government to curb and now the Customs duties on basic food items and other things needed to make life worthwhile have been jerked up beyond their reach. How can the people survive amid all these?”.…CONTINUE FULL READING>>>