Exchange Rate Fluctuations Affecting Clearance Of Consignments – Customs CG

The Nigeria Customs Service (NCS) has said it encountered several systemic challenges that impeded its ability to fulfil its statutory responsibilities effectively in the first quarter of 2024.

The service said apart from the issues ranging from noncompliance with regulations and infrastructure limitations, the significant fluctuation in Nigeria’s exchange rate led to a notable decline in cargo throughout the quarter, evidenced by a 4.89 per cent decrease in transactions handled.

“Significant fluctuations in exchange rates applied in the customs clearance of consignments posed considerable difficulties,” Comptroller-General of Customs Adewale Adeniyi said yesterday during his quarterly media briefing on the performance of the NCS in Abuja.

This was as the Customs CG disclosed that the service demonstrated remarkable performance in revenue collection in the first quarter with a collection of N1,347 trillion. The collection for the first quarter represents a 122.35 percent increment when compared to the same period of last year when N606.12bn came in.

The exchange rate utilised by Customs in the clearance of goods via the Nigeria Integrated Customs Information System (NICIS) is based on the rate determined by the Central Bank of Nigeria (CBN). In the last quarter, a total of 28 rates were directed by the CBN, ranging from N951.94/$1 in January to a peak of N1,662.35/$1 in February 2024.

While a singular exchange rate of N951.94/$1 was maintained in January, February witnessed 15 different spot rates ranging from N951.94/$1 to N1,662.35/$1. March saw 13 different spot rates applied, ranging from N1,303.84 to N1,630,16.  These fluctuations resulted in an average applied exchange rate of N1,314.03/$1 in the clearance of Customs goods during the quarter.

“The repercussions of these fluctuating rates have sent concerning signals to our stakeholders, affecting and disrupting activities. Beyond the speculation regarding potential gains it may have on NCS revenue, the implications on transaction volumes are significant and outweigh any possible benefits. These concerns are already manifesting in current activities, with the potential for lagged effects in the coming months,” he stated at the event in Abuja.

He however said the NCS, with the support of the minister of finance, Wale Edun, has initiated periodic consultations with the CBN to mitigate the potential impact of exchange rate fluctuations on import activities.

A detail of the income generation in Q1 showed that in January, revenue collection surged by 95.60 percent, reaching N390.824bn from N199.81bn recorded in January 2023. The upward trend continued in February 2024, with a staggering 138.68 percent growth, elevating revenue collection to N450.209bn from N188.63 billion in February 2023. By March 2024, the revenue collected by NCS grew by 132.76 per cent from N217.669bn to N506.64bn.

Compared to the federal government’s annual revenue target of N5.07 trillion for the NCS in 2024, the target translates to a monthly revenue target of N423bn.

In the first quarter of 2024, the service recorded a total of 572 seizures, encompassing various items valued at N10.59bn in duty paid value. January saw 111 seizures amounting to N 842.992mn in paid duty, while February marked the highest seizure numbers of 432, totalling N3,704.7bn. Rice constituted 39 percent of the seizures, followed by petroleum products at 26 percent, with motor vehicles and textiles accounting for 9 per cent and six per cent of the seizures, respectively.

He disclosed that the introduction of e-auction has generated N1.6bn income in February and March.

He appreciated the granting of a 90-day window to owners of uncustomed vehicles, facilitating the payment of appropriate duties on previously imported vehicles into the country.

Meanwhile, the Customs is gearing up to launch a Customs Analytical Laboratory, a critical measure set to take effect in Q2 and Q3. The Customs Analytical Laboratory is a specialised facility equipped with advanced analytical instruments and techniques for the scientific analysis of goods and materials.

Its primary objective is to ensure compliance with customs regulations by providing accurate and reliable testing and analysis of imported and exported goods. The laboratory will conduct various tests to determine the authenticity, composition, quality, and safety of goods, including testing for chemical composition, product integrity, and adherence to regulatory standards, according to the CG.