Peg exchange rate for import duty at N1000/$, CPPE urges FG

The Centre for the Promotion of Private Enterprise (CPPE) has said that Nigerian manufacturers and investors are currently under pressure because of elevated inflationary pressures that have aggravated pressure on production costs, weakening profitability, eroding shareholders value and dampening investors confidence.

This is even as the group urged the Federal Government to peg the exchange rate benchmark for the computation of import duty at N1000/dollar

In a statement signed on Thursday by its Director/CEO, Dr. Muda Yusuf, the group said that Nigeria’s major inflation drivers are not receding, but if anything, have become even more intense.

According to the CPPE statement, “Persistent inflationary pressures in the Nigerian economy have continued to be a troubling phenomenon, especially because of the acceleration effect on poverty and deterioration of citizens welfare.

“Purchasing power had continued to slump over the past few months.

“Headline inflation rose to an all time high of 29.9% in January as against 29.92% in December.

“Food inflation maintained its uptrend rising to a frightening high of 35.4% in January as against 33.9% in December. Economic growth may remain subdued while the risk of stagflation heightens

“Regrettably, the major inflation drivers are not receding, if anything, they have become even more intense.

“These include the depreciating exchange rate, surging transportation costs, logistics challenges, forex market illiquidity, astronomical hike in diesel cost, insecurity in farming communities and structural bottlenecks to production.

“These are largely supply side issues. The weakening of the Naira against the currency of our neighbouring countries [CFA], had continued to incentivise the outflow of agricultural products to these countries. This is complicating the supply side challenges, especially of food crops.

“Elevated inflationary pressures also aggravated pressure on production costs, weakens profitability, erodes shareholders value and dampens investors confidence.

“Only very few producers or service providers can transfer cost increases to their consumers. The implication is that manufacturers and other investors are currently under tremendous pressure.

“Tackling inflation requires urgent government intervention to address the challenges bedevelling production, productivity, foreign exchange and insecurity in the economy. The real sector of the economy needs to be incentivised to ensure moderation of production costs.

“The government needs to review its tariff policies by granting concessionary import duty on intermediate products for agro allied industries and other industrialists. The same is true of investors in the logistics sector.

“The exchange rate benchmark for the computation of import duty should be pegged at N1000/dollar.  This is necessary to reduce the pressure of escalating costs of cargo clearing and minimise uncertainty in the international trade processes. The policy choice of complete floating of the naira requires a rethink in the light of the current inflationary outcomes, volatility and market imperfections.

“The effects of high energy costs on economic activities are profound.

“It is very difficult to tame inflation if we do not fix power, logistics and forex issues. Regrettably,  there are no quick fixes in these areas.  But it is important to prioritise these issues and ensure stability and recovery.”