Nigeria’s Import Duty Nightmare: How the CBN’s Frequent FX Adjustments Hurt the Economy

Nigeria is facing a severe import duty crisis as the Central Bank of Nigeria (CBN), led by President Bola Ahmed Tinubu, has increased the customs duties exchange rate for the third time in 2024. DAILY POST revealed that the exchange rate for calculating import duties has risen from N1,413.62 to N1,417.63 per US dollar, a 0.28 per cent increase.

This means that Nigerians will have to pay more to import goods into the country, as the import duties are based on the dollar rate. The official exchange rate at the foreign market was N1,469.97 per US dollar on Friday, making the naira weaker against the dollar.

The CBN has been adjusting the exchange rate frequently since President Tinubu introduced the floating naira policy in June 2023, a move aimed at stabilising the forex market. However, the policy has not yielded the desired results, as the naira has depreciated by over 200 per cent in eight months.

The CBN has adjusted the exchange rate seven times since June 2023, from N422.30/$ to N589/$, then to N770.88/$, N783.174/$, N951.941/$, N1,356.883/$, N1,413.62/$, and now N1,417.635/$. This has made importation more expensive and unpredictable for businesses and consumers.

Experts have warned that the high import duty will lead to inflation and hardship in the country, as most goods and services depend on imported inputs. Bisiriyu Fanu, the former chairman of the Association of Nigeria Licensed Customs Agents at Seme Border, said that the import duty hike will affect the entire market and reduce the purchasing power of Nigerians.

Muda Yusuf, the Director of the Centre for the Promotion of Private Enterprise, also expressed his concern that the increased import duty will worsen the poverty situation in the country. He urged the government and the CBN to review the policy and find a more sustainable solution to the forex challenge.