The business environment in Nigeria has recently been rocked by major fluctuations in the cost of customs clearance of imports. Indeed, with the implementation of the Customs Law of 2023, importers have started to see a significant increase in costs related to customs clearance of imported goods. This law granted the Central Bank of Nigeria (CBN) the authority to set the rate used to calculate customs duties based on the prevailing exchange rate.
This new policy has had a significant impact on the cost of customs clearance of imported goods due to exchange rate fluctuations in the foreign exchange market. In just 16 days, the cost of clearing imports increased by 23%, from 1,150.16 Naira/dollar on April 23, 2024 to 1,412.6 Naira/dollar as of May 8, 2024.
Compared to the January 2024 exchange rate figures which stood at 951.941 Naira/dollar, this represents a 48% hike. The Central Bank of Nigeria, keen to appease the criticism which followed these significant fluctuations, advised from the beginning of 2024 the Nigerian customs services to adopt the closing exchange rate within the official window for the calculation customs duties.
This circular, effective February 26, 2024, replaces previous directives from the Central Bank of Nigeria. Prior to this directive, on February 21, 2024, the Central Bank increased the customs duty rate for clearance of imported items by 4.5% from 1,537.073 Naira/dollar to 1,605.82 Naira/dollar, the highest rate ever recorded in the domestic port industry since the exchange rate reforms in June 2023.
The recovery of the Naira in April 2024 has been attributed to reforms by the Central Bank of Nigeria which strengthened the national currency against the dollar thanks to the increased supply of the currency. This provided immediate relief to importers facing high customs clearance costs at ports.
Jonathan Nicole, former President of the Lagos State Shippers’ Association, spoke on the issue in an interview with Fatshimetrie, lamenting the constant fluctuations in import duty rates and highlighting the serious difficulties encountered by importers and manufacturers in their investments.