CPPE wants Nigeria's customs duty exchange rate pegged at ₦1,000/$1 for next 6 months

The Centre for the Promotion of Private Enterprise is advocating for Nigeria to peg the customs duty exchange rate at 1,000 naira to the U.S. dollar for the next six months. The call comes in light of concerns regarding the unpredictable exchange rate for cargo clearance that has yet to be adequately addressed by the Nigerian government. Muda Yusuf, Director at the Centre for the Promotion of Private Enterprise, emphasized the need for this measure to alleviate the pressure on businesses and citizens grappling with inflation, high production costs, and operational expenses. Yusuf pointed out that the economy faces major challenges stemming from three principal drivers of costs: exchange rate depreciation, energy costs, and trade costs. While external factors influence foreign exchange and energy costs, Yusuf highlighted the potential for policy interventions to mitigate trade costs. He stressed the need to avoid amplifying the exchange rate factor in international trade costs, as it currently heightens trade expenses and exacerbates economic challenges. Moreover, Yusuf criticized the Central Bank's involvement in determining the customs exchange rate, labeling it as an intrusion into trade policy. He called for urgent corrective measures to separate the responsibilities of the Central Bank from those of trade policy authorities. According to him, maintaining the status quo perpetuates problems in cargo clearance, leading to a significant drop in cargo traffic, increased smuggling activities, and heightened competition among compliant businesses. In response to government interventions aimed at supporting manufacturers and small businesses, Yusuf welcomed the initiative to disburse a 150-billion-naira loan to boost the real sector. However, he cautioned against bureaucratic mismanagement and suggested involving development financing institutions due to their capacity and expertise. Yusuf highlighted the importance of concessional financing to bolster the competitiveness of businesses amid challenging market conditions. Amid discussions on Nigeria's competitiveness, Yusuf underscored the significance of addressing macroeconomic and structural issues while normalizing the policy environment. He emphasized the need to tailor policies to Nigeria's economic peculiarities rather than blindly adopting market principles, to achieve desired outcomes and deter illicit practices. As Nigeria navigates complex economic terrain, stakeholders await potential policy adjustments to enhance trade efficiency, reduce costs, and stimulate business growth. The recommendation to peg the customs duty exchange rate at ₦1,000/$1 reflects a proactive approach to alleviate financial burdens and foster a more conducive business environment.