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The Centre for the Promotion of Private Enterprise (CPPE), has urged the Central Bank of Nigeria (CBN) to peg the customs duty exchange rate at N1000 per dollar for the rest of the year.

Its Founder, Dr Muda Yusuf, gave the advice on Sunday in Lagos via a statement.

According to him, the appeal is in line with the Federal Government’s commitment to ease the current hardships on the citizens and the burden on businesses.

Yusuf welcomed the decision of the CBN to approve the use of the exchange rate reflected on the import documentation [Form M] at the onset of import transaction.

This, he said, was a laudable response to the grievances of investors in the economy and would reduce the current uncertainty around imports and related transactions in the economy.

He, however, noted that the intervention does not address the bigger and the more troubling issue of the current prohibitive cost of cargo clearance at the ports, which had risen by over 40 per cent in the last two months.

“The high exchange rate for import duty assessment is fueling the already high inflation, increasing production and operating costs for manufacturers and other businesses.

” It is worsening the cost-of-living crisis and putting thousands of maritime sector jobs at risk.

“There is also the added risk of cargo diversion to neighboring countries and heightened smuggling which can jeopardise the realisation of customs revenue target.

“The current customs duty exchange rate of N1488.9 per dollar, is still too high in the context of the current galloping inflation and difficulties facing businesses and the citizens,” he said.

The CPPE boss revealed that instances of

abandoned cargo was on the increase as a consequence of escalating trade cost.

These, he opined, were not good outcomes for an economy seeking to ensure recovery, drive growth, promote inclusion and guarantee social stability.

“Pegging the customs duty exchange rate resonates with the present intervention measures to mitigate the current hardships in the country.

“Besides, this proposition does not in any way detract from the economic reform agenda of the present administration.

“If anything, it will complement the economic transformation measures because of the expected positive impact on competitiveness, productivity, cost reduction, deceleration of inflation and employment generation,” he said.

Dr Muda Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprises (CPPE) has called for an urgent review of Nigeria’s foreign exchange policy to stem its slide and volatility.

Yusuf gave the advice at the maiden edition of the CPPE quarterly press conference on Monday in Lagos.

The conference covers major macroeconomic variables such as the Gross Domestic Product, Naira exchange rate, inflation rate, debt sustainability and fiscal viability of government, among others.

Yusuf said that the increasing currency depreciation in the parallel market remained a cause for concern and should not be allowed to continue.

He stressed that the current rigid stance of the Central Bank of Nigeria (CBN) on the foreign exchange policy was hurting investors.

The CPPE chief said it was also creating distortions and retarding the recovery prospects of the Nigerian economy.

He highlighted that the benefits of a flexible exchange rate model enhance liquidity in the foreign exchange market, eliminate discretion in the allocation of forex and reduce uncertainties.
Yusuf reiterated the CPPE proposition that the country should adopt a flexible exchange rate policy.

“Let me clarify that this is not a call for currency devaluation, rather, it is a pricing framework that reflects the demand and supply fundamentals.

“It is a model that is sustainable, predictable and transparent and would reduce uncertainty and inspire the confidence of investors.

“It would minimise discretion and arbitrage in the foreign exchange allocation mechanism,” he said.

He also called for deepening of the autonomous foreign exchange market through the liberalisation of inflows.

“The sector also needs acceleration of reforms to boost private investment in domestic petroleum refineries to stop the current massive forex outflows and incentivise the gas sector,” he said.

Yusuf identified major headwinds to investment performance and economic growth in the last couple of months.
These, he said, include insecurity and the worsening foreign exchange crisis reflecting in the sharp and continuous depreciation of the naira.
According to him, the parallel market rate depreciated by over 15 per cent in the past three months, reaching a low of N590/dollar, meanwhile, the official exchange rate remained fixed at N416/dollar.
This, the CPPE boss said, signposted the widening gap between the parallel and the official market rate with its attendant distortions in the economy.
“Major macroeconomic indicators suggest that the Nigerian economy is floundering and is being further weakened by these headwinds.
“A stumbling economy cannot afford these multiple shocks.
“The government therefore needs to take urgent steps to pull the economy from the brink,” he said.
Reviewing the country’s Gross Domestic Product (GDP) growth rate, Yusuf noted that it grew by 3.40 per cent in 2021, year on year marking the highest growth rate since 2015.
He, however, noted that laudable growth performance was one thing, while translating the growth to improved welfare, job creation, poverty reduction and economic inclusion was a completely different matter.

“The last few years were characterised by worsening poverty situation, high inflationary pressures, massive erosion of purchasing power, high energy prices, escalating production cost, sharp currency depreciation and many more.

“These are critical developmental metrics on the basis of which the performance of the economy should also be measured.

“Therefore, going forward, policy makers should prioritise these key development indicators.

“Citizens welfare and investment productivity in the economy matter even more than the GDP numbers,” he said.

Addressing inflation, Yusuf said that the technical computation of the inflation figures by the National Bureau of Statistics was not in dispute.

He, however, said that the reality of inflation impact over the past one year was at variance with the official inflation data.

Yusuf noted that for the basket of goods consumed by most households, prices had jumped by between 30-100 per cent over the past one year.

“Businesses have been similarly impacted as they have been experiencing a slump in sales, turnover and profits margins.

“The impact on small businesses is even more severe because of their limited capacity to absorb economic shocks.
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“The spiraling inflation dynamics deserves an urgent policy response at the highest level of government as the impact on citizens’ welfare is severe,” he said.