RE: CBN, CUSTOMS DUTY EXCHANGE RATE RISES TO N1,356/$ – ISSUES ON THE MARBLE BY SEA EMPOWERMENT RESEARCH CENTER

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RE: CBN, CUSTOMS DUTY EXCHANGE RATE RISES TO N1,356/$ – ISSUES ON THE MARBLE BY SEA EMPOWERMENT RESEARCH CENTER

The Sea Empowerment Research Center wishes to note that, at the recently concluded World Economic Forum (WEF), one of the global concerns raised at the forum revolves around drop in the global trade volumes as witnessed in 2022/2023. The WTO, Director General, Dr Okonja Iweala gave performance statistics and proffered options available to the global bodies, to overcome the challenges in this direction and thus boost global trade volumes in the face of myriads of global challenges impeding on trade volumes amongst nations.

She urged trading Countries to stimulate trade increase volumes via trade policy rebates and waivers, eradicate any delay associated with dwell time, increase trade facilitation windows, removal of trade barriers, promote bilateral trade agreements, etc, it was never heard of a systemic and incessant duty exchange rate increments as an alternative window or bar up.

“In my Center’s candid opinion, the Coordinating Ministry, should formostly carry out or conduct impact analysis (of the increment from ₦400plus exchange rate for duty onwards to ₦700plus) on trading public and related activities across the international markets, the manufacturing sectors and the consuming public.

“In the Center’s opinion, formulating fiscal and monetary policies without recourse to weighing it’s economic implications in every sense of responsive leadership via a crystal and statutory feedback mechanism, falls short of the renewed hope mantra.

“The Center believes that one of the core objectives of renewed hope mantra should stem from rising from the old order to more requisite new order, especially in application. As such, the Center equally believes that, the Ministry has a duty to know how many businesses are closing shops per month; how many are down-sizing weekly, monthly and quarterly; what is the population out of job Nigerians; how stable is the labour market under the prevailing circumstances; how has the inflation rate affected the purchasing power of the citizenry; the contributory effect of this policy/increments to the ailing economic hardship and poverty in the land; its contributory effect to the insecurity in the land.

“Shying away from undertaking a deliberate review on these critical concerns, to say the least is tantamount to a mere display of poor administrative sensitivity to the impulse, to the well being of the citizenry and commercial environment of the nation.”

The Center added :  “It has been argued and still an ongoing argument at different quarters whether the CBN “Duty Exchange Rate Increment’ is or not often the determination nor the function of market forces? It was rather reasoned that, at many instances, incessant revenue escalating methodology in this regards is a deliberate act, aka monthly ritual to aide higher or surplus revenue spines and if care is not taken, may snowball into forth nightly application.

“Therefore, there is need for the fiscal policy makers to do a total system re-evaluation, with a third eyes to specifically monitor some of the deployed regulatory tools so far.

“Expectedly, every aspect of our monetary policy tool must be geared to thrive on a level playing field, devoid of preferential treatments or application, so that, the market forces determination will not be a theory but practicality.

“The Center indeed observed the associated trade documentary disruption in the administration of foreign exchange regime with regards to International Chamber of Commerce – ICC Rules on Uniforms Customs and Practice ( UCP) for Documentary Credits, that is the general application of the UCP 600, the Form M regulations come under consideration.

“Though, it could be contested that the rules do not have the force of law, but given legal effect by their incorporation into mutimodal transport contracts, notwithstanding, where monetary policies tend to ignore its stipulations on the life span of one year duration of its Form M transctional applications and treatments on imports, thus, shippers imports landed post Form M opening to meet the new exchange rate, should not be subjected to uniform treatment at the point of import clearance nor subjected to undue queries and associated delays.

“There is need for the Coordinating Minister to carry out an independent system study and analysis within the nations International trading climate, via an independent body. Such evaluation and recommendations will indeed help the Ministry to restructure the monetary and fiscal policy formulation.

“The effects of these increasingly foreign exchange rate in relation to servicing international loans and other issues raised here, has to be looked into, because, it is not a mere factor. It must be stated that monetary policy reforms must be done with a scalpel and not an axe, and by people who understand that, the problem of currency devaluation or the poor performance of the foreign exchange transactions is not truly caused by international trading or trades alone.

“It has been argued that, the cosy relationship and activities of some Currency Dealers (Bureau De Change) seems to be taking the shape of another form of concentration, even though, inevitable in a country of our size.

“Fiscal policy makers, have a duty to understudy and discourage the activities of insider trading within the banks at all levels, with special focus on the the growing pace of hacking via internet banking. Fiscal policies must be deliberate at encouraging our most enterprising citizens to engage in other, more nationally beneficial money making ventures, for instance, international traders must be encouraged, and not driving them and their capital and associated job creations out of the country, via overtaxation.

“Fiscal policies must have the capacity to monitor and checkmate the activities of an investor which turns a monopolist with cosy relationships with insider trading, thus oligarchy thrives unabated, as they have mastered the ability to borrow huge sums of money for acquisitions, then manipulate accounting principles, play legal takeover games or avoid payments of accurate taxes, in reality such investors do not really contribute to the nation’s wealth.

“As a responsive government, it is expected that, fiscal policies must be structured in such a manner that places emphasis on revamping its fiscal implementation regime so that, it must seek to protect the larger number from acts of bullying and abuses associated with cosy relationships, resulting to failure and compromises to regulatory standards.

“The fact of the matter is that, the benefits, opportunities and strength of a nation’s fiscal policy cannot be bought out or reduced by the overtures of monetary policy aimed at regulatory obligations but cushioned by the fiscal policy, anything in the contrary, is nothing “other than serfdom, working for the lord of the manor or becker’s owned by the lord”.

“From study conducted out there amongst the trading public, in the manufacturing sector and trading sector, every organization is cutting down costs and readjusting overhead costs, but in the real sense of economic adjustment, it is not so with the NASS, Judiciary and the Executive as evidenced in their 2024 respective budgets, characterized with vehicles and furniture acquisitions, when the ones at hand are not totally in a bad state, but can be maintained accordingly. The Nation will recover and do better by cutting costs of governance.

“Experiences gained from other countries, have shown that no country successfully sustains its economic development and viability on a premise where its banking system simply means “big guys gets bigger and the little guys wait to get token over by the big guys, where monopolies, certain individuals having enormous financial powers.

“Fiscal policy must not been seen as to overtaxing trade, especially trade amongst other country, rather in a distressed economy, like ours, fiscal policies considers tax options on wealth/luxury ( such as estate, gift taxes or annual wealth taxes), while being mindful of the activities of a handful feifdom and dynasties known as “economic aristocracies”.

The Center stressed :  “It is no longer hidden nor overstatement noting that, the present state or spate at which our foreign exchange regime stands, is the over doze or ripple effects of “monopoly game gone wild and players have snapped up just about all the squares”, the making of previous government.

“In conclusion, there will be need to explore the in roles of professionally research and development in this regards. Most often formulation of fiscal policies for trade related needs and leaving out the fiscal policy to drive the Freight logistics chains breeds limitations to the overall performance of our national trade volumes.

“In specific terms, tax exemptions on logistics services equipments acquisition and importation – policies implementation should be redefined. Under a deliberate national discriminatory policy, Tax law should provide for a dividends free tax when paid by Nigerians to Nigeria corporations and an imposition of 10% on dividends when paid by foreign investments or foreign investors.

“Against the backdrop of the overwhelming consequences of this increment, We wish to sign off, by requesting the Coordinating Minister, to direct the CBN to desist from this act of incessant increment of exchange rate for customs duty assessment forth with, doing so, for the interest of over stretched and suffering Nigerians populace, in the spirit of the renewed hope mantra.

“This is our Centre’s position and right of expressions on the incessant increments on the exchange rate for customs duty administration.”

Fwdr Dr Eugene Nweke Rff Fnis Ksm
Head Of Research, @ Sea Empowerment Research Center

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