CBN reduces duty FX rate eighth time in May as naira trades above N1500/$

The Central Bank of Nigeria (CBN) has reduced the exchange rate used for the computation of import duties to N1,446.281/$. The latest cut is the eighth this month.

The reduction represents a 2.46 per cent cut from the previous rate of N1,481.875/$ used for the opening of Form M. This latest reduction, obtained from the official trade portal of the Nigeria Customs Service (NCS), is the seventh adjustment in May.

A former president of the Shippers’ Association of Lagos (SAL), Jonathan Nicol, said most countries have standardised windows for imports, which are not subject to arbitrary changes by the government, saying: “At a glance, you know your duty rates.”

The reduction comes as the naira continues to maintain moderate gains at both official and parallel markets, trading above N1500/$ at the black market. Yesterday, the currency was quoted at around N1480/$ at the street markets. On Tuesday, the Nigerian Autonomous Foreign Exchange Market (NAFEM) closed at 1465.68/$.

Nicol criticised the frequent adjustments of the Customs import duty rate by the CBN, stating that it destabilises importers and drains their investments. He noted that duties are paid based on the rate issued by the bank on Form M, which should not be altered arbitrarily.

Nicol highlighted the challenge of the Naira’s inability to appreciate despite Nigeria’s export of crude oil and gas, which should earn sufficient foreign exchange, saying, “We should not be in this currency fluctuation turmoil at all.”

“The Nigeria Customs Service benefits financially from these adjustments, backed by the regulatory banks to meet their misguided targets. It exemplifies the failure of our economic policies. The resulting inconsistencies force importers to abandon their goods at ports or relocate to countries with stable import regulations,” Nicol stated.

Nicol urged the CBN to stabilise the Naira and avoid unnecessary interference with the cargo clearing exchange rate tied to the dollar. The National Public Relations Officer of the Association of Registered Freight Forwarders of Nigeria (AREFFN), Taiwo Fatomilola, questioned how businesses can survive under such unstable exchange rates for trade both nationally and internationally.

Fatomilola criticised this administration for lacking a strategic plan for traders and manufacturers in Nigeria, noting that the current monetary policy on trade and rising customs import duty exchange rates are detrimental to businesses in the country.

Meanwhile, the Comptroller-General of NCS, Adewale Adeniyi, said the service is set to collaborate with the Federation Account Allocation Committee (FAAC) Post-Mortem Sub-Committee to develop strategies aimed at boosting revenue generation and enhancing trade facilitation.

He said this joint effort seeks to identify innovative solutions to optimise revenue collection and streamline trade processes, ultimately promoting economic growth and development in Nigeria.

The Chairman of the FAAC Post-Mortem Sub-Committee, Kabir Mashi, commended the service for the revenues generated into the federation account and swift response to issues.

He further obliged the Comptroller-General to work towards improving revenue collection into the federation account while declaring FAAC’s support to assist NCS in aiding trade facilitation.