The Central Bank of Nigeria has instructed the Nigerian Customs Service (NCS) to utilize the FX closing rate on the date of the ‘Form M’ submission by importers for the clearance of goods and import duty assessment.
This measure aims to tackle the volatility and frequent updates on the customs website concerning the liberalization of the foreign exchange market.
The CBN stated this in a statement signed by its Director of Trade and Exchange Department, Hassan Mahmud noting that there the regular changes in the customs duties rate have disrupted pricing structure leading to irregular increase in the final cost of goods in the market.
- The bank stated, “To this effect, the Central Bank of Nigeria wishes to advise the Nigeria Customs Service and other related parties to adopt the FX rate on the date of opening the Form M for importation of goods, as the FX rate to be used for import duty assessment. This rate remains valid until the date of termination of the importation and clearance of goods by the importers.
- “This would enable the Nigeria Customs Service and the importers to effectively plan appropriately and reduce uncertainties around varying exchange rate in determining revenue, or cost structure respectively.
- Therefore, effective 26th February 2024, the closing rate on the date of opening of Form M for importation of goods and services would be the rate that would apply for assessment of goods and services. This supersedes the requirement of Memorandum 9, J (2) of the Central Bank of Nigeria Foreign Exchange Manual (Revised Edition) 2018.”
Backstory
The Nigeria Customs Service through the CBN has been regularly reviewing and adjusting the exchange rate for import duties and clearance of goods on its website to reflect the prevailing market rate following the unification of the forex market in June. Since the beginning of this year, the service had adjusted the forex rate almost twice weekly.
More Insights
The Central Bank of Nigeria (CBN) in June 2023 unified the foreign exchange market in a move geared towards floating the market. Since then, the naira has lost over 100% of its value on the official window.
- The weakness of the naira coupled with other fiscal policy initiatives like the removal of fuel subsidy pushed inflation to a 28year high as of January at 29.90%. The inflation is mainly driven by food and transport with the former’s inflation rate at 35.4% in January.
