Customs Foreign Exchange (FX) duty rate volatility is complicating the initial transactions for clearing agents and importers, causing significant disruptions in the clearing process and causing disputes between clearing agents and importers, stakeholders have observed.
The Central Bank of Nigeria (CBN) had directed a total of 29 rates, ranging from N951.94/$1 in January 2024 to a peak of N1,662.35/$1 in February 2024.
While a singular exchange rate was maintained in January, February saw 15 different spot rates, and March had a total of 13 different spot rates applied, ranging from N1,303.84/$1 to N1,630.16/$1.
Despite the exchange rate experiencing a steady decline to N1,150.10/$1 on April 24, it increased to N1,373.64/$1 on May 1, rose again to N1,441.53/$1 on May 3, and declined to N1,382.16/$1 on May 7 before rising to N1,412.57/$1 on May 8.
The rate was adjusted to N1414.59/$1 on May 9 and increased to N1,457.01/$1 on May 11. On May 14, the rate was lowered to N1,407.06/$1 but escalated to N1,502.136/$1 on May 15.
The rate was slashed to N1,492.08/$1 on May 16 and was increased again to N1,530.367/$2 on May 17. The Customs duty rate was again adjusted to N1,500.837/$ on May 19 and was further reduced to N1,481.875/$1 on May 21. It was again slashed to N1,446.281/$1 on May 22.
Industry practitioners highlighted the severe impacts of the unstable Customs FX rate at the point of clearing, which is causing big issues among clearing agents and importers.
The Public Relations Officer for the Association of Nigerian Licensed Customs Agents (ANLCA) Tin Can Island Port Chapter, Onome Monije, emphasised that the fluctuating FX rates particularly affect the clearing of vehicles and goods not covered by the Pre-Arrival Assessment Report (PAAR) system.
“The goods that have PAAR don’t have much problem because some of them are multinational. But for clearing vehicles, we are having challenges,” she said.
She explained the complicated process of refunds during an increased FX rate, as she detailed a scenario wherein, if the clearing costs increase due to FX rate changes after a payment has been made, resolving the discrepancies can lead to conflicts and additional charges.
The National Public Relations Officer of the Association of Registered Freight Forwarders of Nigeria (AREFFN), Taiwo Fatomilola, lamented that the lack of a stable exchange rate is making it nearly impossible to provide reliable quotes for services, forcing importers to delay payments and complicating logistics as well as making it impossible to provide a stable pricing structure.
“Our job is highly contestable now because of the lack of a stable exchange rate. You can’t give a static price because the price changes every day,” he stated.
Fatomilola said this situation often results in delays, increased demurrage charges, and ultimately higher costs for end consumers.
He also lamented that the competitive nature of the clearing business exacerbates the problem, with agents at risk of losing clients to competitors willing to absorb losses or quote lower fees.
The industry professionals urged the government to implement a minimum of 15 working days for Customs FX rate stability to allow for better planning and execution of clearing activities.
They also criticised the disparity between the CBN exchange rate and the Customs FX rate, which exacerbates the financial burden on clearing agents and importers.
The industry leaders stressed that without government’s intervention to stabilise the FX rate, the clearing business and by extension, Nigeria’s import and export trade, would continue to suffer, impacting economic growth and stability.
