• Importers route cargoes to Benin, Togo, Ghana
• 50% of Onne, Lagos port cargoes abandoned
• Nigeria sees 65% drop in importation
• Port experts predict worse crisis
The frequent hikes of the import duty rate may have triggered a major crisis at the Nigerian ports as an increasing number of Nigerian importers are routing their cargoes to Tema, Ghana; Lome, Togo and Cotonou, the Republic of Benin.
The trend has caused a substantial decrease in cargo importation and business activities at Nigerian seaports. Whereas the extent of impact is yet to be known, the House of Representatives has pegged the reduction at 65 per cent.
The Lagos ports, which used to be a beehive of activities, are gradually becoming ghost towns. Recent visits show that many agents and ‘hustlers’ have abandoned the complexes as activities have reduced drastically.
There are fears that the situation, if left unaddressed, could have significant impacts on revenue generation. Already, the situation is taking a toll on the turnover of the Nigeria Customs Services (NCS) – an agency that is struggling to meet its N5.1 trillion target.
The Customs exchange rate hikes have forced many importers to abandon their goods in the ports, with sources saying about 50 per cent of the imported cargoes have been abandoned due to exorbitant charges.
Last year’s foreign exchange (FX) market liberalisation has caused a significant rise in the exchange rate with NCS also adjusting its index rate to align with the spot rate. The import duty benchmark stood at N1,605.82/$, almost 70 per cent increase from the early February rate.
The multiple hikes seen in the past 20 days may have forced Nigerian importers and investors to dump the country’s ports for facilities in Ghana, Togo and the Republic of Benin.
Specifically, it was gathered that Nigerian investors are fast moving to the ports of Tema in Ghana; Lome in Togo and Cotonou in Benin, leading to 65 per cent decrease in cargo importation and business activities at the Nigerian seaports.
Consequently, The Guardian gathered that Nigerian importers are fast establishing a business base in neighbouring countries where they source dollars at affordable rates to clear their cargoes.
Also, the importers claimed the markets in the neighbouring countries are lucrative as they recover their capitals with huge profits within a short time.
The Guardian also learnt that Nigerian traders travel to neighbouring countries to purchase the goods and smuggle them into the country. Barely a week after the House of Representatives urged the CBN to reduce and maintain the system exchange rate for customs and excise duty at N951.94/$1, the exchange rate was raised to N1,605.82/$.
The apex bank within the space of three weeks increased the Customs duty exchange rate nine times. Specifically, the apex bank on February 2 adjusted the exchange rate to N1, 356.883/$, it raised the rate on February 3 to N1, 413.62/$ and later increased it on February 9 to N1, 417.635/$ and to N1,444.56/$ by February 11.
Again, on February 14, the CBN adjusted the exchange rate to N1,481.982/$ and on February 15, it increased to N1,515.092/$, which it was later reduced to N1,472.756/$ on February 16 and increased to N1,537.073/$ on February 18 and now N1,605.82/$ February 21, 2024.
The lawmakers had on February 15, 2024, sent a prayer to the CBN to reduce the floating exchange rate to N951.941/$, to enable import and export of goods to have a stable process in ease of doing business.
The lawmakers’ plea was also to prevent inflation and to balance economic stability as well as ensure competitiveness in the global market.
However, barely 24 hours after the requests, the CBN reduced the Custom exchange rate to N1,472.756/$, which was after it had increased it to N1,515.48/$.
On February 15, the Senate approved N5.079 trillion as the revenue target and N706.4 billion as the budget for the NCS in the 2024 fiscal year. The Senate Committee Chairman on Customs, Excise, and Tariff, Jibrin Isah, said as part of the Customs strategy, the provision of the flexible window will help ensure the proper collection of expected import duties and 25 per cent penalty charge from such categories of transactions.
He said mechanisms such as systems audit, real-time auditing, post clearance auditing, institution of revenue recovery committee and other intelligence gathering tools will ensure an intensive revenue recovery drive.
Following this development, the apex bank defied the House of Representative prayer and increased the rate from N1, 472.756/$ on February 16 to N1, 537.073/$ on February 18 and now N1,605.82/$.
The two times increase is in defiance of the lawmaker’s plea that the frequent adjustment of customs exchange rate is causing inflation and disrupting import and excise duty calculations, which businesses rely on for business planning.
The Chairman of the Customs and Excise Committee at the House of Representatives, Leke Abejide, decried that the country’s current system, which relies on a market-based exchange rate for calculating customs duties, causes fluctuations based on market conditions and poses significant predictability and stability challenges for businesses.
Abejide lamented that due to the frequent customs exchange rate hikes, Nigerian importers were shifting towards ports in Tema in Ghana; Lome in Togo, and Cotonou, thereby causing a substantial 65 per cent decrease in cargo importation and business activities at Nigerian seaports.
He said daily container examinations have dropped from approximately 250 to just about 80.The Head of the Customs and Trade Facilitation Committee of Importers Association of Nigeria (IMAN), Ajanonwu Vincent, said as of May 2023, the total cost of importing, clearing, transporting and warehousing a 1×20ft container in Lagos State was N10 million, but currently cost as much as N40 million.
He said the CBN, Customs Service, Federal Ministry of Finance and the government’s pursuit of revenue generation to service the country’s debts through towing the current line of fiscal policy implementation, would cripple Nigerian international and local trades.
Confirming the development around the ports, Vincent said the government should brace up for little or no revenue collection from import as of September 2024 as importers are fast withdrawing from the business of importation into the country and taking them to neighbouring countries.
He also stressed that international and local trades have been exposed to the highest level of risk, uncertainty and unpredictability.
“While you budget N1444/$ by the time your cargoes arrive, the Central Bank has adjusted the Customs exchange rates two or three times to about N1605/$ and it will also increase it to N1700/$. So, you have imported at a great loss,” he stated.
He said the Nigerian economy and the masses will suffer the worst inflation from June 2024 upwards because, at that time, the adverse effects of these obnoxious policies would have hit the nerves and bones of the economy and its citizens.
Vincent also warned that the government will face serious revolts, riots and strike actions in the next three months due to hunger, poverty, hardship, suffering and hopelessness.
The Chairman/Managing Director of Lamsam Intercontinental Company Nigeria Limited, Port Harcourt, Samuel Njoku, said the cost of clearing is exorbitant as importers pay about N18 million to clear 1×40ft container and N10 million to clear 1×20ft container. He disclosed that as of December 2023, importers used N7 million to clear 1×40ft containers and N5 million for 1×20ft containers.
According to him, with the frequent hike in Customs duty exchange rate, which is now at N1, 605/$ to clear goods, importers have started abandoning Nigerian ports to neighbouring countries where their exchange rate is doing well.
Njoku, also an importer, said the exchange rate in those countries is encouraging and at reasonable rates, noting that importers now prefer to sell their goods there because the market is thriving with huge profits. He said Nigerians now go to the neighbouring countries to buy the goods in smaller quantities at lower prices and bring them into the country with no duty paid.
Njoku also stressed that the high cost of clearing goods at Nigerian ports has forced importers to abandon their goods as it is costlier than the value of the goods .
According to him, about 50 per cent of the total cargoes that come into Onne port will be abandoned due to this situation.
“If you have planned to use between N6 million to N7 million to clear your container and someone is telling you to use N18 million now. If what you want to use to clear the goods is costlier than the value of the goods, you have to abandon it at the port because you might clear the goods and not recover your money,” he said.
Former member of the Presidential Committee on Destination Inspection and Ministerial Committee on Fiscal Policy and Import Clearance Procedure, Lucky Amiwero, confirmed that vessels are not coming into the country, noting that the ports are now dry of cargo vessels.
“You may have imported a consignment of 400+/$ and then come to the country and there’s an exchange rate increase, you have to go back to the increased rate and you find out you may not have money to clear. You have to abandon it there. There is going to be a lot of abandonment of cargo and because it’s not consistent you are not sure if what you are going to bring in you can clear because of the exchange rate. It’s a very difficult time,” he stated.
He said many people who have invested in their business might not want to go through all these things and are gradually moving to Ghana and Togo to source for alternatives.
According to him, sourcing dollars from Ghana is cheaper as they have only one point of exchange rate. He said people are no longer importing into the country, warning that in the next two weeks, people will not bring in their goods.
The Deputy National President, Air Logistics, National Association of Government Approved Freight Forwarders (NAGAFF), Dr Segun Musa, said the customs and the CBN have realised that the “crazy” target set is not realisable, hence, the ambush with ‘ridiculous’ exchange rate.
He said this was how the embattled former CBN Governor, Godwin Emefiele, started with unethical interferences that crippled the import regime during the last government.
THEGUARDIAN
