The instability of the foreign exchange in the official and parallel market as well as the Customs exchange rate for cargo clearance have reduced cargo volume into the nation’s seaports.
This is even as importers stopped importing cargoes into the country, citing instability in the Customs exchange rate by the Central Bank of Nigeria (CBN).
LEADERSHIP reports that earlier in June 24, 2023, the CBN adjusted the exchange rate from N422.30/$ to N589/$, and on July 6, 2023, it was adjusted to N770.88/$, on November 14, 2023, it was adjusted to N783.174/$, in December N951.941/$.
Also, on February 2 it was moved to N1, 356.883/$ and on February 3, it was raised to N1, 413.62/$, on Saturday, February 10, it was changed to N1,417.635/$, on Monday February 11, it was moved to N1,444.56/$1 and on Wednesday, February 14, the CBN adjusted the exchange rate to N1481.482/$1 and on Thursday, February 15, 2023 it was moved to N1,515.092/$1.
On Friday, February 16, 2024, the CBN reduced the rate to N1,472.756 per dollar, on Wednesday, February 21, 2024, it exchanged for N1605.82/$1.
But on Friday, February 23, 2024, the Customs duty rate was reviewed downwards from N1, 605.82/$ to N1, 488.896/$. This reduction represents a 7.3 percent drop when compared to the old rate of N1, 605.82/$ used as of Thursday, February 22, 2024, and a reduction of N116.924 on a dollar.
The reduction is the second time in 2024 that the Customs exchange rate is being adjusted on the downward trend, which is expected to bring some measure of relief to the importer who will save about N116.924/$ from the rate used on Thursday, February 22, 2024.
LEADERSHIP gathered that importers are weighing the options of diverting their cargoes to Togo, Ghana and Benin Republic
However, speaking to LEADERSHIP, a vehicle importer based in Germany, Abbey Abolaji, said he had stopped importing vehicles and other cargoes into the country.
According to him, the fluctuating exchange rate has made it difficult for importers to break even, saying the vehicle market has stalled.
“I used to bring in Mercedes Benz, Volkswagen, Volvo and Opel into Nigeria but it has become extremely difficult to break even, so I stopped. Euro has hit the rooftop, customs exchange rate for clearance is another issue. Now a vehicle I sell for N3 million now goes for N7 million for buying and clearance so, how do I make gain or break even?”
“Sincerely, I have to stop and focus on other business here in Germany; when the exchange rate goes down, I will resume my importation but now I have suspended importation,” he stated.
The national president, Association of Nigerian Licensed Customs Agents (ANLCA), Emenike Nwokeji, stated that apart from affecting Foreign Direct Investments (FDIs), it also affects port volume.
According to him, importers or manufacturers would reduce the numbers of containers imported into the country because of forex volatility and instability.
“Currently, importers importing, for instance, three containers will now import one because of the exchange rate. That means lower volume of cargoes in the port. For instance, if N1million will give you $1,000 at N950/$1, but now for you to get $1,000 you will need N1.5 million, that means the money you have will give you lower value of foreign exchange and the money for three containers will give you two now. It will reduce the quantity or volume for manufacturers, it will affect the working capital,” Nwokeji stated.
He advised the federal government to reduce emphasis on revenue, saying revenue is only for the living.
“I am not aware of people stopping importation because if a trader imports, he won’t sell at a loss; rather, he will mark up his margins and sell. What we should be concerned about is the inflationary rates we are seeing. It’s affecting everything, food and even drugs. Revenue is for people that are alive, so if Nigerians are not alive, who is the government generating the revenue for?
“Moreover, the issue of exchange rate is not within the prerogative of the Customs service but only to implement the directive they gave them. The authority has the trade indices and movement in the economy; they know how they come about the indices. The exchange rate volatility is not going to help our trade relationship with other countries because you can’t plan with the frequency of the changes.
“It doesn’t give room for planning because if you are a manufacturer, you don’t know whether to stock or buy in pieces, so it will affect a lot of things and the most damaging is the inflation rate. Investors see Nigeria as an unstable place to invest and it will affect investment because in investment you project, but with this, no one can plan,” the ANLCA president stated.
In her reaction, the public relations officer, Tin Can Island command of the Association of Nigerian Licenced Customs Agents (ANLCA), Com. Onome Monije, called for the federal government’s intervention over the increasing exchange rate that is affecting Cargo clearance at the seaport.
He stated that importers have stopped shipping companies from bringing in their cargo until there is stability in the exchange rate window.
“Due to the fluctuation, importers are thinking they can get support to bring out their vehicles already in the seaports while they stopped further importation. So, this means they are in a fix. Those in Europe have stopped shipments and those who have paid for general cargo importation are confused because with the fluctuation, they don’t know whether it will increase.
“Most importers I work with have stopped their shippers from bringing in their goods as they need to watch the market movement because when you take the goods to the market, people are not buying, so why would they bring goods and at the end they don’t sell. So some of them want to go to Ghana or Togo to see whether that will be easier. Those who haven’t shipped are asking that shippers stop. So, the government must listen because fluctuation and increase in exchange rates affect importation and cargo clearance. And with low volume, how will Customs meet their target if the exchange rate keeps soaring?” Monije asked.
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