Peter Obi slams arbitrary Customs duty hikes, warns of business closures

Presidential candidate of the Labour Party in the 2023 general election and former Anambra State governor Peter Obi, has called on the Nigerian government to end its “arbitrary and ever-increasing” customs duties, warning they are posing a “huge danger” to the economy.

Obi made the call as the Central Bank of Nigeria ( CBN) for the sixth time raised the foreign exchange rate used to calculate customs duty on imported goods from N1, 537.073 to N1,605.82 to the dollar on Wednesday.

In a message posted on his verified X handle (formerly Twitter), Obi expressed concern about the recent string of increases in the foreign exchange rate used to calculate customs duty.

He pointed out that this practice creates significant challenges for businesses, as they make calculations based on the prevailing exchange rate at the start of the import process, only to face higher duties upon arrival of the goods.

The former governor warned that such arbitrary charges could lead to further business closures and job losses.

He said, “A situation where at the point of initiating importation, Form M and other documents related to importation are based on a particular rate of exchange, for example, N1000 to $1, being the prevailing exchange rate at the time which the importer of goods was used to calculate the entire process, from the import initiation to receipt of goods in his warehouse. Then suddenly when the goods arrive in Nigeria, and duties are calculated at different rates, say N1400 to $1, it becomes a serious business challenge that results in business losses. Worse still, it directly fuels the inflationary spike which is the basis of increasing cost of goods and living.said

“Such arbitrary charges will obviously lead to further closure of businesses, and attendant job losses. This is because at the time of the initiation of the business, calculations, including duties, have been made based on the prevailing exchange rate, and the prevailing market prices.”

Obi expressed concern that if not addressed, importers might consider using ports in neighboring countries, resulting in under-productive Nigerian ports and a significant loss of revenue.

“The government should also show consistency in its policies as this will help with economic forecasting and business planning. Businesses are dying and manufacturers are shutting down because of the poor and inconsistent economic policies of the government.

“All efforts of the government should be directed at supporting businesses, especially those in the manufacturing sector, to keep their businesses afloat and keep the economy growing, as the small business sector remains the most critical engine of economic growth.

“We cannot afford to target high customs revenues at the expense of the survival of local businesses, employment and reasonable cost of living, ” Obi said.

The CBN on February 2, 2024, increased the foreign exchange rate used to calculate customs duty on imported goods to N1,356.883/$ and on February 3, it was moved to N1,413.62/$, on Saturday, February 10, it was changed to N1,417.635/$, on Monday February 11, it was raised 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, it was moved to N1,515.092/$1.

While on Friday, February 16, 2024, the CBN reduced the rate to N1,472.756 per dollar, and on Wednesday, February, 21, 2024, it has increased it to N1,605.82/$1.