Business

Tariff increase places importers in dilemma

There is apprehension among importers that there will be cargo shortfall in the third and fourth quarters of 2021 following the increasing exchange rate, BAYO AKOMOLAFE reports

As Nigeria Customs Service (NCS) commences implementation of the new exchange rate introduced by the Central Bank of Nigeria (CBN) to process imports coming into the country, shippers and Customs agents have urged the Federal Government to reverse its decision and maintain the old rate.

The exchange rate was increased from N381 to N404.97 per dollar, but this is not the first time the apex bank would review the increase upward within three years. In 2019, it was increased from N345 to a dollar to N361 and subsequently to N381 per dollar last year.

Concern

However, importers said that the new decision to add N23. 97 to the old rate would further lead to high price of consumer goods in the market and have negative impact on the fragile economy. The importers and agents also explained that it would add to the cost of doing business at the seaports.

For instance, the Managing Director of Sceptre Consult, Mr Jayeola Ogamode, who spoke with New Telegraph, said that NCS was now using the new rate to clear cargoes, noting this was not the right time for government to introduce any rate for importers.

He explained that some importers, especially the manufacturers, would have to pay more for goods which were not cleared before the introduction of the new rate. Ogamode, a cargo consolidation, stressed that the development would lead to inflation and weaken the purchasing power of the consumers. He said: “If at N381 per dollar, it was difficult for importers to clear their cargoes, I am worried by the new rate; definitely, the cost of doing business will go up and consumer will bear the cost in the market.”

Implication

Also, a clearing agent, Mr Sam Elem, explained that many imported goods would be abandoned at the port and lead to congestion. He noted that Customs had no control over the new rate, saying that NSC’s responsibility was to facilitate trade, generate revenue and implement government poli-cies at the seaports and borders.

He said: “They have updated the new rate in their system immediately the CBN increased it. So, no importer can do declaration based on N381 because it has been changed to N404. 97 per dollar and naira is depreciating everyday and our import volume is increasing.” He lamented that some importers, who borrowed money from banks to import raw material, would be affected adversely, saying that while they would be paying back the loans, they will also be operating at a loss because of the N23.97 increase.

He stressed that some finished product were at the various warehouses in Lagos due to lack of patronage by consumers, who could not afford high price. Elem said: “Within the new three months everybody will feel the negative effect of the CBN action. “This is a wrong signal to the genuine importers, manufacturers and investors in the country.”

Complaints

Also, a customs agent, Richard Eze, said that there was no proper communication with stakeholders before CBN increased the tariff, noting that the idea of CBN to unilaterally decide the direction of Nigeria’s economy was not good. He said: “These economic policy makers are driving us out of business. They are chasing us out of this country.

“This is why importers divert cargoes to neighbouring countries where there is conducive business environment to operate. “We will ship our cargoes to where they make business easy for people. “Presently, 80 per cent of Nigerian bound cargoes are being diverted to port of Cotonou, Togo and other West African ports because of the harsh operating environment.

“We are helping the neighbouring ports to boost the economies of their countries. What importers do in is that, they will divert their cargo and cleared them and do transshipment by trucks through the road.” He added that no responsible government would continue to hike import duty when there is tension everywhere in the country, noting that while people were struggling to survive, government was making life difficult for the less privileged. Also, Managing Director of Homeland Delivery Limited, Otunba Bamidele Abraham, explained that the increment would lead to high inflation, which would affect the purchasing power of ordinary Nigerians.

He said: “This week, I have already signed my Form-M and opened a transaction for building materials I imported but Customs is saying that the previous transaction cannot work again because of the new import exchange rate introduced by CBN.” Nevertheless, he urged the Federal Government to order CBN to reverse the import duty to N381, which was on the high side before it was further increased to the new rate. Meanwhile, the President, Africa Association of Professional Freight Forwarders of Nigeria (AAPFFN),Otunba Frank Ogunojemite, has described the increase as unfortunate because the CBN did not consult stakeholders before they make the increment. He added that the new rate would definitely bring an increment in the sales of goods in the market. The president said since the outbreak of COVID-19, there was no basic increase on per capital income of the people and capacity building from the government.

Last line

There is need by CBN to review the import tariff because of the harsh operating environment, inflation and poor state of the economy.

 

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