The Nigeria Customs Service (NCS) has announced an increase in the exchange rate for cargo clearing at the port, as published on the Customs official website. The new exchange rate has risen from N422.3/$ to N589.45/$, which will have implications for importers and manufacturers bringing goods into the nation’s seaports.
As a result of the higher exchange rate, importers and manufacturers will now be required to pay more in import duty tariffs. An additional N167.15 will be added to every dollar of the total amount used to calculate duty. For example, when importing a vehicle, the importer is typically required to pay 20 percent import duty and 20 percent levy, making up 40 percent of the total value of the vehicle.
To determine the dollar value of the car, the Customs will use the Vehicle Identification Number (VIN) Valuation system, which generates the value based on the chassis number of the vehicle. Suppose the VIN-Valuation system assigns a value of $10,000 to the car. In that case, the importer will need to pay 40 percent of that amount as import duty and levy.
To estimate the duty to be paid to Customs, commonly known as the surface value, the dollar value will be converted to naira using the Customs exchange rate of N589.45 per $. Then, 40 percent of that value will be paid as duty and levy.
Additionally, importers are also responsible for paying VAT, surcharges, ECOWAS Tax Liberalization Scheme (ETL), terminal charges, shipping charges, and clearing charges to Customs Licensed Agents.
The higher exchange rate for cargo clearance at the port is expected to have significant implications. Tony Anakebe, a Licensed Customs Agent, explained that importers will now face increased Customs tariffs, leading to higher costs. For example, an importer who paid N1.2 million to clear a 2012 model vehicle when the exchange rate was N422.3 per $ should now be prepared to pay approximately N1.5 million or more. Importers of 20-foot and 40-foot containers, who used to pay duties of about N3 million and N5 million respectively, will also face increased costs depending on the nature of the goods.
Anakebe noted that Nigerians are already struggling with high prices of goods in the market, and this new development will further drive inflation as importers adjust the prices of finished goods to cover the increased costs.
Aissatou Diouf, the general manager of Suzuki by CFAO, highlighted the impact of naira devaluation and high exchange rates on the value of auto products in Nigeria. Diouf stated that as long as the exchange rates continue to rise, market prices of cars will continue to increase. She also confirmed that the Nigeria Customs has adjusted its exchange rate for paying tariffs to nearly N600 per $.
The new exchange rate for cargo clearance at the port has raised concerns among importers and manufacturers who will now face higher costs. It remains to be seen how this adjustment will impact the overall import and manufacturing sectors in Nigeria.
