The House of Representatives on Thursday called on the federal government to rescue the Nigerian economy from imminent collapse and restore investors’ confidence in the system.
It therefore urged the Federal Ministry of Finance and Central Bank of Nigeria to provide adequate notice to stakeholders in the maritime industry and the general public before altering customs exchange rates.
This, the House said, will ensure transparency and allows stakeholders to prepare for any changes that may affect their operations.
The Green Chamber also asked the Central Bank of Nigeria (CBN) to maintain the system exchange rate for Customs duty and excise duty purposes below N1,000/$1 preferably N951.941/$1 to encourage patronage in Nigerian ports to prevent galloping inflation, aiming to balance economic stability.
The House further urged the Federal Ministry of Finance to ensure the international best practice of allowing a 90-day grace period for fiscal policy changes to facilitate the completion of ongoing transactions under existing policies.
The House took these decisions when it unanimously adopted at plenary, a motion moved by Hon. Joseph Leke Abejide (ADC, Kogi).
Moving the motion, Abejide said conventional fiscal policies require a minimum of 90 days to manifest contrary to the current trend in Nigeria where immediate enforcement is prevalent.
According to the lawmaker, this necessitate the need for a shift towards a collaborative approach which integrates fiscal and monetary policies with stakeholder’s engagement to
prevent isolation and guarantee active stakeholders’ involvement in consequential decisions.
He noted that the CBN has raised customs tariffs six times in the past six months, causing inflation and disrupting import and excise duty calculations, which businesses rely on for business planning.
The chairman, House committee on Customs and Excise said, businesses and investors rely on a stable transactional exchange rate for import and excise duty calculations for at least two years to enable effective business planning.
He lamented the CBN’s series of exchange rate adjustments for customs duties within six months, saying; “in 24 June, 2023, the rate increased from N422.30/$1 to N589/$1, followed by N770.88/$1 on July 6, 2023, N783.174/$1 on November 14, 2023, N951.941/$1 on December 7, 2023.
“And a double-adjustment on February 2 and 3, 2024, reaching N1,356.833/$1 and N1,413.62/$1 respectively, illustrating excessive fluctuations and volatility in the currency market, raising significant concerns about business planning and economic stability.”
He expressed worry that due to the frequent customs exchange rate hikes, Nigerian importers are shifting towards ports in Tema, Ghana; Lome, Togo; and Cotonou, Benin Republic, causing a substantial 65% decrease in cargo importation and business activities at Nigerian seaports, with daily container examinations dropping from approximately 250 to just about 80.
Abejide expressed concern over the current system in Nigeria which relies on a market-based exchange rate for calculating customs duties causes fluctuations based on market conditions, posing significant predictability and stability challenges for businesses.
He said the situation necessitated alternative solutions for customs duties by considering options like a fixed-rate system or a hybrid system combining market based and fixed elements to enhance predictability and stability.
Adopting the motion, the House mandated relevant committees to interface with the Minister of Finance, Wale Edun; CBN Governor,
Olayemi Cardoso and Comptroller General of Customs, Bashir Adeniyi on how fixed exchange rate for Customs and Excise duties will work for the system to boost exports and encourage patronage in the nation’s ports.
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