The Presidential Committee on Fiscal Policy and Tax Reforms has advised the Nigerian federal government to adopt a stable exchange rate of N800 per dollar for calculating Customs import duties. This recommendation aims to mitigate the impact of fluctuating exchange rates on businesses.
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Chairman Taiwo Oyedele, speaking in Lagos, highlighted the challenges posed by the constantly changing import duty rates due to the volatile foreign exchange (FX) market. He stressed that this volatility hampers adequate business planning.
“When we did the budget, we projected the naira to be N800 to the dollar, but now it is over N1,000. Businesses need stability to plan effectively. We are proposing that the government set the exchange rate for Customs duties at N800 per dollar until December,” Oyedele explained.
Support from Industry Stakeholders
BusinessDay reports that the exchange rate for computing Customs duties has seen rapid adjustments by the Central Bank of Nigeria (CBN). The committee’s proposal aligns with the views of industry stakeholders who advocate for a hedged exchange rate for Customs duties.
Calls for Fiscal Policy Oversight
Muda Yusuf, Director-General of the Centre for the Promotion of Private Enterprise (CPPE), emphasized that the exchange rate for import duties should fall under fiscal policy, which is better attuned to business realities. He suggested quarterly hedging of the exchange rate at N1,000 or N1,100 to safeguard businesses.
Impact on Investor Confidence
Kingsley Igwe, National Secretary of the National Association of Government Approved Freight Forwarders, called on the CBN to hedge or benchmark the FX rate for duty payments, noting that the fluctuating rates are undermining investor confidence.
Frequent Adjustments by CBN
In the first quarter alone, the CBN directed 28 different rates for computing Customs duties, according to Wale Adeniyi, Comptroller General of Customs. This frequent adjustment underscores the need for a more stable and predictable exchange rate policy for import duties.
Conclusion
The recommendation to adopt a stable N800/USD exchange rate for import duties is seen as a critical step toward enhancing business planning and investor confidence amid Nigeria’s volatile FX market.
