The Central Bank of Nigeria in what seems to be a tactical devaluation of the Nigerian currency, the Naira has increased the exchange rate for Custom Duties for goods imported into the country.
The Central Bank of Nigeria had a weeks ago, changed the exchange rate for Customs duty from N306 per dollar to N326/$ without explaining the reason for the action.
The incremental adjustment is about 6.13 % additional in value to the earlier exchange rate
The action of the bank had attracted wide condemnation from operators and stakeholders in the economy, with some saying that this would have a huge negative impact on importers who had conducted their transactions at the exchange rate of N306/$ before the sudden increase.
The increase is also likely to impact on the cost of production and general prices of commodities as the incremental increase in price will eventually be passed on the the consumers who are already labouring on high level inflation and low disposable income.
According to The President, Lagos Chambers of Commerce and Industry (LCCI), Mr Babatunde Ruwase
“The loss to the economy and the welfare cost to citizens will certainly outweigh the revenue gains to the government. Excessive focus on revenue drive could undermine the realisation of the objectives of the Economic Recovery and Growth Plan, especially from an investment and poverty reduction perspective.”
Ruwase listed some of the implications of the foreign exchange rate review to include high cost of raw materials, inflationary pressure on products and services across sectors, erosion of profit margins for investors, negative welfare effect on citizens as general price level increases.