CPPE urges CBN to stabilise exchange rate, peg customs duty at N1,000

The Centre for the Promotion of Private Enterprises (CPPE) has urged the Central Bank of Nigeria (CBN) to adopt a framework that minimises volatility in the customs duty exchange rate.

Dr. Muda Yusuf, founder of CPPE, said in a statement on Wednesday in Lagos that this would boost investors’ confidence and drive economic growth.

Yusuf noted that the frequent changes in the customs duty exchange rate had become a huge burden on the business community.

According to him, the situation has led to high volatility in cargo clearing costs, worsening inflationary pressures, and aggravating investment risk, especially in the real sector of the economy.

He stated that these frequent changes were detrimental to production, planning, and other real-sector activities in the Nigerian economy.

“In the first quarter of this year, there were changes in the customs duty exchange rate twenty-eight times.

“In April, the frequency of changes would be close to ten times or even more. As of May 1, 2024, the rate had jumped to N1,373.65 per dollar. It was less than N1,200 per dollar a few days before.

“It is extremely difficult for investors to plan under these unstable circumstances.

“The situation has introduced an unprecedented level of uncertainty and unpredictability to international trade dynamics.

“Investment risk has become elevated, planning has become difficult, risk management has become challenging, and investors’ confidence is being weakened,” he said.

Yusuf stated that it was a double challenge for investors to contend with, especially with volatility in the foreign exchange market and a high level of unpredictability in the international trade ecosystem.

He said the framework should adopt a quarterly customs duty exchange rate after due consultation with the fiscal authorities.

Yusuf proposed a commencement rate of N1,000 per dollar customs duty exchange rate.

“Consultation with the fiscal authorities is imperative because of the trade policy implications of such decisions.

“It is also consistent with the commitment of the present administration to effective coordination between fiscal and monetary authorities,” he said.