Rescue economy from imminent collapse, Reps tell Tinubu

•lament cargo importation slides by 65 per cent

 

 

The House of Representatives on Thursday tasked President Bola Ahmed Tinubu on the need to rescue the country’s economy from imminent collapse by restoring investor’s confidence.

The resolution was passed sequel to the adoption of a motion sponsored by Chairman House Committee on Customs, Hon Leke Abejide who solicited for the House intervention in addressing the economy downtown.

The lawmakers specifically tasked Federal Ministry of Finance on the need to ensure the international best practice of allowing a 90-day grace period for fiscal policy changes to facilitate the completion of ongoing transactions
under existing policies.

In his lead debate, Abejide observed that conventional fiscal policies require a minimum of 90 days to manifest, in contrast to the current trend in Nigeria where immediate enforcement is prevalent.

To this end, he underscored the urgent need for a shift towards a collaborative approach which integrates fiscal and monetary policies with stakeholder’s engagement to prevent isolation and guarantee active stakeholders’ involvement in consequential decisions.

“The House also notes that the Central Bank of Nigeria has raised customs tariffs six times in the past six months, causing inflation and disrupting import and excise duty calculations, which businesses rely on for business planning.

“The House is aware that businesses and investors rely on a stable transactional exchange rate for import and excise duty calculations for at least two years to enable effective business planning;

“The House is alarmed that the Central Bank of Nigeria experienced a series of exchange rate adjustments for Customs duties within six months, in 24 June, 2023, the rate increased from N422.30/$1 to N589/$1, followed by N770.88/$1 on July 6, 2023, N783.174/$1, on November 14, 2023, N951.941/$1 on December 7, 2023, and a double-adjustment on February 2 and 3, 2024, reaching N1,356.833/$1 and
N1,413.62/$1 respectively, illustrating excessive fluctuations and volatility in the currency market, raising
significant concerns about business planning and economic stability.

“The House is worried that due to the frequent Customs exchange rate hikes, Nigerian importers are shifting towards
ports in Tema, Ghana; Lome, Togo; and Cotonou, Benin Republic, causing a substantial 65% decrease in cargo importation and business activities at Nigerian seaports, with daily container examinations dropping from approximately 250 to just about 80.

“The House is concerned that the current system in Nigeria which relies on a market-based exchange rate for calculating Customs duties causes fluctuations based on market conditions, and poses significant predictability and stability challenges for businesses, thus necessitating alternative solutions for customs duties by considering options like a fixed-rate system or a hybrid system combining market based and fixed elements to enhance predictability and stability.”

The lawmakers also urged the Federal Ministry of Finance and Central Bank of Nigeria to provide adequate notice to stakeholders in the maritime industry and the general public before altering customs exchange rates. This ensures transparency and allows stakeholders to prepare for any changes that may affect their operations.

“The House is worried by the the current economic downturn, the House tasked Central Bank of Nigeria to maintain the system exchange rate for Customs duty and Excise duty purposes below N1,000/$1 preferably N951.941/$1 to encourage patronage in Nigerian ports to prevent galloping inflation, aiming to balance economic stability with competitiveness in the global.”

The lawmakers further urged Federal Ministry of Finance to ensure the international best practice of allowing a 90-day grace period for fiscal policy changes to facilitate the completion of ongoing transactions under existing policies.

To this end, the House mandated the joint Committees of Customs and Excise, Finance and Banking Regulations to interface with the Minister of Finance; Governor of Central Bank of Nigeria (CBN), and Comptroller General of the Nigeria Customs Service on how fixed exchange rate for Customs and Excise duties will work for the system to boost exports and encourage patronage in the nation’s ports.