More pressure on industries, businesses over N952/$1 exchange rate for import

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More pressure on industries, businesses over N952/$1 exchange rate for import

• N2m increase on 40ft container, N350,000 rise on vehicle clearance
• Importers to divert cargoes to other climes, Nigeria’s ports to become idle
• Stakeholders: Increase will induce inflation, more businesses to shut down
• Cost of drugs to increase, health of masses a concern
• FG urged to address security, shipping growth, ports operations

Barely a month after the Federal Government through the Central Bank of Nigeria (CBN) raised the exchange rate for importation to N783/$, Nigerians are in for more hardship this yuletide as the rate was again raised to N952/$ yesterday, leaving importers stranded as they face more financial pressure to clear their goods at the port.

This is the fourth time in six months the import exchange rate has been adjusted by the Nigeria Customs Service (NCS) under the President Bola Tinubu ‘Renewed Hope’ agenda after the Service started the implementation of the floating foreign exchange rate regime by the CBN.

The CBN had on June 24, 2023, adjusted the exchange rate from N422.30/$ to N589/$. On July 6, it was re-adjusted to N770.88/$, and again on November 14, it was re-adjusted to N783.174/$, and now a new regime rate of N951.941/$. The new rate was reflected on the Customs portal.

This adjustment in FX rate for cargo clearing at the port, coming a few weeks before the Christmas and New Year celebrations, according to port users, will have a huge impact on the prices of imported goods already being pressured by surging inflation.

Already, prices of goods have increased as well as cost of production, as investors dump the country. Also, containers are being abandoned at the seaports, causing congestion. The new increment will have the seaports congested with abandoned cargoes as importers and agents will not be able to clear their cargoes.

Stakeholders have raised concerns that the new FX rate will effectively cause an increase in import duty payable to the NCS and would overall affect prices of goods in the market.

Confirming this, the Public Relations Officer, Tin-Can Island chapter of the Association of Nigerian Licenced Customs Agents (ANLCA), Onome Monije, told newsmen that importers and their agents are going to experience a bleak Christmas owing to the high tariff for clearing goods at the port. She said the increment would affect both vehicle and containerised goods, and advised clearing agents to engage their principals to forestall disagreement.

The Public Relations Officer, Association of Registered Freight Forwarders of Nigeria (AREFFN), Taiwo Fatomilola, lamented that the duty on 1×40ft container has increased from N7 million yesterday to N9 million after the increase of the exchange rate. He also said there is a N350,000 increase on the duty on each car.

The Vice Chairman of Business Action Against Corruption (BAAC) Integrity Alliance, Lagos, Jonathan Nicol, said the sudden hike in exchange rate for goods clearing will jeopardize shippers’ businesses and definitely increase cost of doing business, which will further induce inflation.

Nicol, who is also the former President, Shippers Association of Lagos (SAL), said the Federal Government, in tackling the issue of foreign exchange rate, is unfortunately driving existing industries into coma, in addition to the cost of diesel, unbudgeted exchange rate, cost of transportation, which will certainly go up, along with the cost of 400 per cent increase in terminal charges, among others.

According to him, more cargo will be diverted to other climes and the nation’s ports will not be as busy as they should have been.

“I also know the government is aware of the inflationary pressure on citizens. Increase of cost of clearing at this time is ill-timed during the Christmas festive period. The government targeted the Christmas rush to make more money through Customs duty, while goods cleared will be difficult to sell.

“We hope this will be the last onslaught of government pressure on importers. Next year, hopefully, things might change for Nigerians as the cost of doing business in Nigeria will be tackled vehemently to restore confidence in our trading public. Imports will reduce drastically and more industries will close down due to uncontrolled investment uncertainties in the sector,” he stated.

The National President, Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON), Frank Ogunojemite, said from the business perspective, it is sad news to wake up and see the margin of Customs exchange rate from move from N783/$ to N951/$, which means that the cost on both import and export will definitely increase.

He said this will also affect the projected amount of the money allocated for such procurement and in return the end users will bear the burden.

Ogunojemite added without any reservation that inflation will take place and possibility for businesses to collapse is higher, thereby creating more unemployment.

“The weakness in people’s purchasing power due to inflation caused by all these incessant increments will aid bribery and corruption or inefficiency at work places,” he said.

The Chairman/CEO of St. Rachael’s Pharma, Mr. Akinjide Adeosun, expressed concern that there will be an increase in the price of drugs because the import rate has gone up as over 70 per cent of drugs consumed in the country are imported.

MEANWHILE, the Federal Government has been urged to disburse the over $350 million Cabotage Vessel Finance Fund (CVFF) to indigenous shipowners to grow local capacity building in the country, while pointing out that shipping and ports operation still suffers numerous challenges.

Stakeholders who made the call at the 25th yearly Retreat/Award of the League of Maritime Editors (LOME), held in Lagos yesterday, stressed the need to ensure the ports run 24 hours, while urging the government to address issues like security in the maritime industry.

The theme of the event is “Harnessing Nigeria’s Potential in Marine and Blue Economy/The new customs 2023 Act and its implication on trade.”

The President of LOME, Timothy Okorocha, urged President Tinubu to provide the Minister of Marine and Blue Economy, Adegboyega Oyetola and his ministry, the needed impetus to end the unending rat race of the disbursement of the CVFF, established in 2003.

He said Tinubu should start a new lease of life for the capacity development of the indigenous ship owners and to enable Nigeria participate meaningfully in the nation’s seaborne trade; especially with the proposed commencement of the implementation policy of the blue economy.

According to him, as insiders, the League over the years has seen the genuine struggle by the Nigerian Maritime Administration and Safety Agency (NIMASA) and its leadership, especially under the present administration to disburse the CVFF in its commitment to grow local capacity building, but observe the otherwise disruptive tendencies within the field of political play.


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