The Nigeria Customs Service (NCS) has adjusted the exchange rate for customs duties collection to N1,618.73 per dollar, marking an increase from the previous rate of N1,600.32 per dollar. This new rate is the highest since March 2, 2024, when the rate was N1,630 per dollar.
The rise in the customs duties exchange rate comes amid a notable depreciation of the naira, which fell by 6.43% in July. Data from FMDQ reveals that the naira hit a four-month low in July, fluctuating between N1,500.32 and N1,621.12, surpassing the N1,600 mark.
This depreciation occurred despite the Central Bank of Nigeria (CBN) implementing measures to mitigate liquidity issues in the official market through several foreign exchange sales. In July, the CBN conducted at least three sales to authorized dealers and one to Bureau de Change (BDC) operators, aiming to stabilize the naira.
These interventions by the CBN likely boosted FX turnover on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window. According to Nairalytics, the research division of Nairametrics, FX turnover in the official market rose by 30%, reaching $4.34 billion in July, up from $3.33 billion in June.
Revenue Growth Despite Challenges
In the first half of 2024, the NCS reported revenue of N2.74 trillion, a 127% increase compared to the same period in 2023. This significant growth occurred despite a decline in cargo throughput, foreign exchange rate fluctuations, and reduced cargo transactions during the quarter.
The NCS faced considerable challenges in the first quarter of 2024 due to fluctuations in the CBN’s exchange rate regime for import duties, which disrupted its operations. The service had to use 28 different exchange rates for import duty collection in the first quarter, with 13 different rates applied in March alone.
Recommendations for Stability
The Presidential Committee on Fiscal Policy and Tax Reforms recommended pegging the customs duty exchange rate to the benchmark exchange rate used in the 2024 appropriation act of N800 per dollar to ease the burden on the business community. Additionally, the Centre for the Promotion of Private Enterprise (CPPE) suggested that the CBN adopt a quarterly exchange rate for import duties collection, allowing importers to better plan their business activities.
