FG Increases The Exchange Rate To N951/$ For Cargo Clearance

FG Increases The Exchange Rate To N951/$ For Cargo Clearance

As Nigeria Customs Service (NCS) modifies the exchange rate for cargo clearance from #783/$ to #952/$, prices of goods are set to rise

The previous exchange rate of #783.17 to the USD has been reviewed higher to #951.94, marking a huge 22.8% gain, according to checks on the federal government's trading portal of the NCS.

The rate has been assessed higher for the second time in the last four months.

The Central Bank of Nigeria (CBN) increased the exchange rate for imports to #952/$ on Thursday, less than a month after it had previously increased it to #783/$. This has left importers trapped as they face increased financial pressure to clear their products at the port. 

The Nigeria Customs Service (NCS) has changed the import exchange rate four times in the last six months since June. The CBN changed the currency rate from #422.30/$ to #589/$ on June 24. It was modified once more on November 14, 2014, to #783.174/$, and once more on July 6, to #770.88/$. The Customs portal showed the updated rate of #951.941/$ on December 7.

Concerns have been expressed by stakeholders that the new FX rate will essentially result in a rise in the import duty that must be paid to the NCS and have an impact on market prices for goods as a whole. The high cost for clearing goods at the port will make Christmas for importers and their agents miserable, according to Onome Monije, the spokesman for the Association of Nigerian Licenced Customs Agents (ANLCA) Tin-Can Island chapter. 

She warned clearing agents to involve their principals to avoid conflict, stating that the increase would impact both vehicle and containerized items.

Read: ‘I Will Raise GDP To 1 Trillion USD In 8 Years’ — New CBN Governor Cardoso Says

Customers are finding it difficult to get cash from banks, which is concerning evidence that the cash constraint that grounded the economy at the beginning of this year is returning. Due to this, Point of Sale (POS) operators have been compelled to increase withdrawal fees by up to 100% in several locations and limit the amount that a client can withdraw at a time. 

This follows the Central Bank of Nigeria's (CBN) decision made earlier this month that both the old and new naira notes are still valid forms of payment and should be used interchangeably. Some commercial banks in Lagos and the Federal Capital Territory (FCT) establish withdrawal limitations of between #10,000 and N50,000. Investigations showed that banks are currently limiting the amount of cash that is available because, in their words, there isn't enough to go around.

Further, the government is prohibited from introducing or changing multiple currency practices, concluding bilateral payments agreements that violate Article VIII of the IMF Articles of Arrangement, or imposing or escalating restrictions on the ability to make payments and transfers for ongoing international transactions. The Fund emphasized that there will be ongoing monitoring of these four performance criteria.

Following a coup in July, the Economic Community of West African States (ECOWAS) bloc placed a number of sanctions on Niger. A West African court dismissed a challenge brought by the country's military junta to abolish these restrictions. One of several recent coups in the Sahel area of West Africa, soldiers from the Nigerien Presidential Guard captured President Mohamed Bazoum on July 26 and subsequently installed what they dubbed a transitional administration.

The transitional administration claimed before the ECOWAS Community Court of Justice in Abuja that the sanctions—which included border closures by Niger's neighbors and a halt to Nigeria's power supplies—had caused problems due to a shortage of food and medication. However, the court dismissed the lawsuit, stating that because the junta “is not a recognized government and a member of the ECOWAS state,” it was ineligible to bring legal action on behalf of Niger.