Central Bank of Nigeria Directs Customs to Use Form M Exchange Rate, Amid Calls for Further Adjustments

The Central Bank of Nigeria (CBN) has issued a directive that the exchange rate to be utilized by the Nigerian Customs for importation should align with the rate quoted on the Form M submitted by importers. The adjustment comes after the exchange rate for importation underwent more than six revisions in the current year, contributing to the surge in the country’s cost of living, with inflation hovering around 30 percent.

The Centre for the Promotion of Private Enterprise (CPPE) has urged the CBN to fix the customs duty exchange rate at N1,000 per dollar for the remainder of the year. Dr. Muda Yusuf, CEO of CPPE, applauded the CBN’s decision to align the exchange rate with Form M but emphasized the need for further intervention to ease the hardships on citizens and businesses.

In a circular issued by Dr. Hassan Mahmud, Director of the Trade and Exchange Department at CBN, the bank acknowledged concerns raised by importers regarding irregular changes in Import Duty Assessment levies applied by the Nigerian Customs Service (NCS). The circular advised the NCS to adopt the closing forex rate on the date of opening Form M for importation, ensuring stability in planning and minimizing uncertainties associated with varying daily exchange rates.

Effective February 26, 2024, the closing rate on the Form M opening date will be the basis for import duty assessment, as opposed to the requirements of Memorandum 9, J (2) of the Central Bank of Nigeria Foreign Exchange Manual. The CBN expressed confidence that these measures, part of ongoing forex market reforms, will bring stability to the market and enhance market confidence for the growth and development of the Nigerian economy.

Dr. Yusuf acknowledged the CBN’s intervention but highlighted that it did not address the substantial issue of the prohibitive cost of cargo clearance at ports. He emphasized that the high exchange rate for import duty assessment is exacerbating inflation, escalating production and operating costs for businesses, and putting jobs in the maritime sector at risk.

The CPPE appealed to the CBN to peg the customs duty exchange rate at N1,000 per dollar for the rest of the year. Dr. Yusuf argued that the current rate of N1,488.9 per dollar remains too high in the context of rampant inflation and the challenges faced by businesses and citizens. He stressed that this adjustment would align with ongoing measures to alleviate economic hardships without conflicting with the administration’s economic reform agenda.

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