Import duty FX rises to N1,618/$1 despite Tinubu’s pledges

Barely 24 hours after President Bola Tinubu assured citizens of addressing their concerns, the exchange rate for the Nigeria Customs Service (NCS) duties collection for imported goods at the seaports increased to N1,618/$1.

Protesters had demanded that the government restore import duties to their previous rates to revive local industries and ease the financial strain on consumers, however, the import duty rate rose from N1,601.86/$1 to its highest level yet.

In his broadcast addressing the nationwide protests, Tinubu stated that he had heard the citizens’ plight loud and clear, and assured them of the government’s commitment to listening and addressing their concerns.

Despite this, the current duty exchange rate represents an increase of N16.872, amounting to a 1.053 per cent rise, according to the latest figure from the Customs trade portal yesterday.

The Comptroller General of Customs, Bashir Adeniyi, highlighted the significant challenges the NCS encountered due to fluctuations in the Central Bank of Nigeria’s (CBN) exchange rate regime for import duties. He said these fluctuations disrupted operations and led to a drop in cargo throughput in the first half of 2024.

Despite these challenges, Adeniyi reported that the service generated N2.74 trillion in revenue, marking a 127 per cent increase compared to the same period in 2023.

Reacting, the National Public Relations Officer of the Association of Registered Freight Forwarders of Nigeria (AREFFN), Taiwo Fatomilola, raised serious concerns over the duty practices, describing them as “arm-twisting” methods that burden importers while the government celebrates increased revenue.

Fatomilola expressed frustration over the rising costs and aggressive revenue collection tactics, which he said are creating a challenging business environment for importers and licensed agents.

He underscored the growing dissatisfaction among freight forwarders and importers facing escalating duty rates, highlighting the stark difference between legitimate duty collection and the coercive tactics currently employed, which he believes aim to boost government revenue at the expense of trade facilitation and fairness.

Fatomilola questioned whether the government’s revenue generation strategies are trade facilitation-friendly or frustrating importers and businesses.

Drawing a comparison, Fatomilola noted that the cost of clearing a truck head has skyrocketed, explaining that before Tinubu’s administration, it was N600,000, but it has since risen to N1.7 million and now N2.4 million.

The current increase in the FX rate for customs duties collection reflects the recent weakening of the naira on both the official and parallel window despite relative quietness in June reflecting some level of stability in the FX market.
Calm FX market in June

In the month of June, there was some level of stability in the FX market and even the customs exchange rate. The exchange rate fluctuated between N1,473 and N1,510, closing the month at N1,505.30/$1, indicating a 1.3 per cent depreciation for the month.