Nigeria Customs Service (NCS) has experienced a 7.1 percent decline in revenue collection despite increasing tariffs on imports by over 82.3 percent. According to reports, the NCS collected a total of N1.3 trillion in the first six months of 2023, compared to N1.4 trillion collected in the same period last year. This drop in revenue comes despite the higher import duties paid by importers due to adjustments in the exchange rate used for calculating import duties.
In June, the Customs Service raised the exchange rate for cargo clearing at the port from N422.3/$ to N589.45/$. Subsequently, in July, it further adjusted the rate to N770.88/$ following the introduction of the Floating Exchange Rate Regime by the Central Bank of Nigeria. These adjustments were intended to boost revenue collection, but they seem to have had a negative impact on import volume and revenue.
According to the half-year report of the Nigerian Ports Authority, the import volume also recorded a significant drop within the first half of the year. Only 1,851 vessels visited Nigerian seaports during this period, bringing in about 707,985 Twenty-foot Equivalent Units (TEUs) of containers and 33,895,784 metric tons of cargo throughputs. This represents a 16.6 percent drop compared to the same period in 2022, which saw 1,992 ships with a combined Gross Registered Tonnage (GRT) of 60.2 million tons.
Importers and customs agents have expressed their concerns about the decline in business at the port. Lagos-based importer, Emma Nwabunwanne, attributed the slowdown to the naira redesign policy that affected economic activities in the first quarter of the year. He also pointed out that the high tariffs should have helped Customs close the revenue gap, but difficulties in accessing foreign exchange and the continuous rise in exchange rates used for calculating import tariffs have hampered revenue collection.
Tony Anakebe, a Customs Licensed Agent, echoed similar sentiments, predicting that import volume and Customs revenue might further drop as the harsh economic situation in the country continues to take its toll on more Nigerians.
The NCS will need to address these challenges and find ways to boost revenue collection while ensuring that importers and businesses can continue to operate efficiently amidst the changing economic landscape. Balancing revenue generation with trade facilitation and promoting a favorable business environment will be crucial to stimulate economic growth and support the nation’s recovery efforts.
