CBN fixes duty charges to Form M amid calls for N1,000/$ rate

By Temitope Adebayo

The Central Bank of Nigeria (CBN) has directed that the rate to be used by the Nigerian Customs should be what is quoted on the From M of importers.

Form M is a key requirement for initiating the importation process and is used by importers or their authorised representatives to provide necessary information to banks for processing.

The volatility of the exchange rate, according to analysts and importers, has contributed to the rising cost of living in the country where inflation is within the borders of 30 per cent

The CBN, in a circular issued by the Director of Trade and Exchange Department, Dr Hassan Mahmud, to the Nigerian Customs Service and the general public, said, it noted the concerns of importers of goods and services and the irregular changes in the Import Duty Assessment levies applied by the NCS.

According to the apex bank, the uncertainty of the forex rate had “further built uncertainties around the pricing structure of goods and services in the economy and creating abnormal increases in the final sale prices of items, which is largely driven by uncertainties, rather than traditional market fundamentals, with implications to near term inflation trend.

“To this effect, the CBN wishes to advise that the Nigeria Customs Service and other related parties adopt the closing forex rate on the date of opening Form M for the importation of goods as the forex rate to be used for import Duty Assessment. This rate remains valid until the date of termination of the importation and clearance of goods by importers.

“This would enable the Nigeria Custom Service and the importers to effectively plan appropriately and reduce the uncertainties around varying daily exchange rate in determining their revenue or cost structure, respectively.

“Therefore, effective 26th February 2024, the closing rate on the date of opening of Form M for the importation of goods and services would be the rates that would apply for the assessment of import duty. This supersedes the requirements of Memorandum 9, J (2) of the Central Bank of Nigeria Foreign Exchange Manual. (Revised Edition), 2018.

“While the CBN is mindful of the initial volatility and price distortions in the aftermath of the forex market liberalization, the Bank is confident that these reforms, would in the medium term, ensure stability in the market and entrench market confidence necessary to attract investment capital for the growth and development of the Nigerian economy.”

Commenting on the latest policy initiate of the CBN, the Chief Executive of the Centre for Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the development would reduce the current uncertainty around imports and related transactions in the economy. He added that an exchange rate of over N1,400 is still too high for a country that is facing galloping inflation.

Yusuf appealed that the import duty exchange rate should be reduced, saying “the customs duty exchange rate at N1000 to the dollar for the rest of the year in line with the federal government’s commitment to ease the current hardships on the citizens and the burden on businesses.

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“The current customs duty exchange rate of N1488.9 to the dollar is still too high in the context of the current galloping inflation and difficulties facing businesses and citizens. Instances of abandoned cargo is on the increase as a consequence of escalating trade cost. These are not good outcomes for an economy seeking to ensure recovery, drive growth, promote inclusion and guarantee social stability.”