The Nigerian currency, the naira, has been on a steady decline against the US dollar, and this depreciation has had significant ramifications for the country’s economy. One of the most noticeable effects is the sharp decline in cargo imports, which plummeted by 65 percent during the third and fourth quarters of the year. On Monday, October 30, the naira reached an all-time low, trading at around N1,150 to a dollar in the black market.
The weakening naira has also impacted the duties imposed on all imports, forcing some importers to abandon their cargo at the seaports. This situation has raised concerns among clearing agents, who fear that the rise in customs duty will inevitably lead to higher prices for goods in the market during and after the holiday season.
The Tin-Can Island Command of the Nigeria Customs Service (NCS) has acknowledged the challenges that contributed to the decline in imports. Despite these challenges, the NCS is determined to surpass its revenue target for 2023, which stands at over N1.3 trillion. Comptroller General of the NCS, Adewale Adeniyi, has expressed confidence in the service’s ability to meet this projection.
The key factors driving the decline in imports include the high exchange rate, which has also affected customs duty, and difficulties in accessing the dollar at the official exchange rate. In the black market, the dollar fluctuates between N1,150 and N1,200, a substantial difference from the Nigeria Foreign Exchange Market’s (NAFEM) official rate of N848 per dollar.
Investigations indicate that many berths at various terminals in both the Apapa and Tin-Can Island ports remain unoccupied as fewer vessels make port calls. Alhaji Ibrahim Tanko, Coordinator of the 100 Percent Compliant Team of the National Association of Government Approved Freight Forwarders (NAGAFF), reports that over 9,000 vehicles have been abandoned at the ports, taking up valuable space that should be used for other cargo.
Dr. Kayode Farinto, a former acting president of the Association of Nigerian Licensed Customs Agents (ANLCA), reveals that imports have declined by 65 percent, with the likelihood of further drops before the end of the year. He attributes this decline to the naira’s depreciation, which has also affected customs duties collected on cargo.
Alhaji Olukolu Tunde Khallil, CEO of Khallil Associate Nig Ltd, a prominent importer, emphasizes the need for the government to stabilize the naira. He points out that importers who used to bring in three or four containers when the dollar was valued at around N400 have now reduced their imports to one. Some are even going out of business or forming groups to share the costs of importing a single container.
Khallil notes that the government and private investors have heavily invested in agriculture over the last eight years, but the current situation may force them to downsize or cease operations. He particularly mentions the exorbitant cost of poultry feed, which is affecting poultry farmers. He suggests that the government should focus on strengthening the naira, aligning with global efforts to maintain a robust currency.
In closing, Khallil stresses the importance of sound economic policies, suggesting that the country’s economic trajectory will continue to decline unless policymakers fully understand the methodology of policymaking in the context of a nation’s economy. The country’s future economic stability may hinge on its ability to manage the naira’s exchange rate effectively and encourage imports, ultimately bolstering its overall economic health.