A licensed customs agent (name withheld) has called on the Nigeria Customs Service, NCS to adopt the use of discretionary power in determining the exchange rate for the calculation of duty payable on imported goods rather than depending solely on the official rate issued by the Central Bank of Nigeria, CBN.
The agent who chose to speak under anonymous because he has no permission to speak on the issue said that by applying discretionary power which according to him was provided for in customs law, the Service would not only facilitate trade but expand the frontiers of trade and encourage economic growth.
He advised that the Service should take a critical look at some consignments and see how it could bring down the Free On Board, FOB value of those consignments to encourage trade, describing it as the best for the country.
His words, “What would have been the best for this country is for the customs to look at the FOB value of some of consignments and see how they can bring down the FOB. Like vehicles, you bring in the 2008 vehicles and you are given duty meant for 2014 model. Is there anything wrong in customs looking at it and say, we were using $8,000 to calculate duty before, let’s use our initiative to bring the value down to five thousand dollars?”
The source noted that with the current exchange rate for calculation of customs duty as released recently by the CBN, the federal government was set to drive a lot of people out of business and a lot of factories closd down thereby shooting up the rate of unemployment and hardship in the country.
“I went round to most of my shippers especially those who ship from the US, I met some of them at their warehouse, some of them have even closed their warehouse. Those who are still available are those who ship from countries like Jamaica, Lebanon and some parts of Asia. Those are the people surviving right now. Then, when it comes to Nigerian business, a lot of people have dropped from shipping vehicles from US and Canada.
“There was a Corolla that I saw around 11,000 Canadian Dollars. If I should buy that vehicle, it should go for around N12 million. Then, you ship it with around $1,100, it will be running close to N1.7 million . You add it up to around N12 million, you will be talking about N13.7 million . You come down to Nigeria and clear the vehicle with N3 million, probably you will be spending over N16 million on the vehicle. How much do you think the person will be able to sell it? Nobody will be able to afford it.”
Insisting that most people were no longer shipping vehicles anymore and that some companies have reduced their importation of the general cargo, he said, “One implication of this is that most people especially those dealing on vehicles are going out of business. Can you imagine a Toyota Corolla 2006 Model, which they use in running Uber business selling for as much as N6 million. Will you buy? Even if you give it to somebody to run Uber for you and you buy a vehicle of N6 million and give him, do you think in the next one year, he will be able to make that money?
“Even the customs brokers, some of them are out of business right now. The only consolation in this business is that some of us are now focusing attention on export. If you go to the Nigeria Export Promotion Council, you will find out that the Council is receiving a lot of registration because export is the only way people are surviving now but when you talk of import, it’s a no go area.
“You can see the effect, you have wife, you have children, tell them to go to the market and buy something, you will hear the cost of things in the market. What I know is that all the importers who are into manufacturing are going to reduce the level of their importation and our country is not really helping. Assuming we are looking at the exchange rate as the only problem, someone could say that the factories can survive but apart from that, look at the power issue.
“Just stroll and go to National where a lot of agents have their offices, go to long room, you won’t see prominent agents again, they no longer come to work. What do they come to work for? I don’t think customs will be able to meet up with their target this year.”
Acknowledging that the level of importation into the country had dropped, the source maintained that the consignments visible at the seaports we’re those which had already set sail before the introduction of the new exchange rate for calculation of customs duty payment adding that by April, the effect of this adjustment would have been so clear for all to see.
“But I want to tell you the truth, by April, we will be able to know the real effect of this hike on importation because the importation that you are seeing right now are the shipments that were on sail before the policy”, he added.
He continued, “People have started abandoning their cargo and many more will still abandon theirs. When you have Lexus RS350 2014 Model and the duty is N6 million, how much are you going to sell the vehicle?”, he queried.
On suggestion by a former Director General of the Lagos Chamber of Commerce, Dr. Muda Yusuf that the exchange rate for the purposes of customs duty payment calculation be pegged at N1,000 per Dollar, he said, “Does it change anything pegging it? How do the importers source for their foreign exchange? Some of them source for it through the black market at the rate of N1,500 per Dollar or above. They go to the market, they buy and come back to pay duty at the rate of N1,000.
“He only asked for the government to allow exchange rate for calculation of customs duty to be pegged at N1,000, he never asked for anybody going to import who is passing through the bank to be allocated dollars at the rate of N1,000. He is only asking that Customs should calculate the rate of duty for the purpose of duty payment to N1,000.
“You must have sourced dollars at the black market at the rate of N1,500 or more to import but on arrival at the port, the customs will use the rate of N1,000 to calculate duty for you. As far as I am concerned, what that man is asking the CBN to do, assuming they are giving the importers foreign exchange at the rate of N1,000 and then, customs uses N1,000 benchmark to calculate the duty, that would have been a good thing.”
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