The recent decision by the Central Bank of Nigeria (CBN) to increase customs duties by 48.5% has sent shockwaves through the manufacturing sector, raising concerns about heightened production costs and policy uncertainty.
This move, which involves an upward adjustment of the exchange rate for calculating import duties, is expected to significantly impact manufacturers reliant on imported raw materials and critical production inputs.
Manufacturers in Nigeria are already grappling with a myriad of challenges, including currency devaluation and supply chain disruptions.
The abrupt and frequent changes in customs duties exacerbate these difficulties, creating an environment of uncertainty for investors and businesses alike.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, emphasized the adverse effects of policy volatility on trade, investment, and planning.
He highlighted that the series of adjustments in Customs’ foreign exchange rates, spanning from June 2023 to the present, have exacerbated the already high costs of imports.
The sharp increase in customs duties has forced manufacturers to reevaluate their production processes and financial strategies.
Many fear that the additional financial burden imposed by the customs duty hike will erode profit margins and strain cash flow, leading to potential business closures and job losses.
Industry experts, including Bisiriyu Lasisi Fanu and Lucky Amiwero, have criticized the frequency and immediacy of the CBN’s exchange rate adjustments, arguing that they disrupt trade transactions and impede economic stability.
Eugene Nweke warned that the policy could exacerbate poverty and insecurity in the country, urging the CBN to reconsider its approach to exchange rate management.
The manufacturing sector is bracing for challenging times ahead as it navigates the implications of the customs duty hike amidst an already volatile economic landscape.
