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Import Duty: Prices of Import Goods to Increase

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  • Import Duty: Prices of Import Goods to Increase

The Central Bank of Nigeria recently increased foreign exchange rate for import duty by N20 or 6.5 percent to N326.

This was after manufacturers and experts called for lower import duty to support local manufacturers striving to establish a factory in the country.

However, the Nigeria Customs Service has implemented the new exchange rate in Lagos on June 10, suggesting that cost of importation has automatically risen by almost 7 percent.

In turn, the additional cost will be added to the cost of production by importers and subsequently, prices of goods from bread to raw materials will surge.

This, in an economy struggling to pay N30,000 or $92 minimum wage, will erode consumer buying power and further hurt economic productivity.

Nigeria’s inflation rate rose for a second consecutive month in May to 11.40 percent amid rising prices. This number is expected to jump even higher if import duty remained high.

Again, because the nation imports more than 90 percent of its goods, the increase is expected to weigh on national growth.

Mr Emmanuel Onyeme, Public Relations Officer of the Association of Nigeria Licensed Customs Agents at Tin Can Island Port, said the new rate is affecting his office’s interaction with the Customs.

“The new rate took effect at the ports today. It is already affecting our interaction with Customs because if the former exchange rate is N306 and they are placing an increment of N20, with this, some extra money would have been added to it.

“So, the new rate will affect the cost of clearing, especially for those who have collected jobs at the rate of N306, now that they are paying N326, they would have to go back to the importer to collect extra money.

“And if the importer is selling his car for N1 million, with this additional cost, he is going to add whatever is the extra cost to it.”

Other stakeholders believe this move will hurt businesses that imports raw materials, enhance new job creation and salary may continue to struggle. A risky move for an economy just coming out of recession.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Economy

Oil Prices Decline on Rising COVID-19 Cases

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Global Oil Prices Dipped on Friday as New COVID-19 Cases Jump Globally

Global oil prices decline on Friday as the number of confirmed COVID-19 cases surged across the world.

Brent crude oil, against which Nigerian oil is priced, declined from $43.47 per barrel it traded on Thursday during the Asian trading session to $41.60 per barrel on Friday at around 11:39 am Nigerian time.

global Oil prices While the price of US West Texas Intermediate (WTI) crude oil dipped from $40.97 per barrel it traded on Thursday to $38.78 on Friday.

Oil traders and investors are worried that the rising number of COVID-19 new cases would disrupt demand for the commodity and force refineries to shut down once again.

“I do not suspect many oil traders will be looking to place significant bids in the market today, suggesting prices may continue to wallow into the weekend,” said Stephen Innes, chief global markets strategist at AxiCorp.

Despite efforts by both OPEC plus and other top oil producers to halt falling oil prices and reduce global oil glut, the lack of a cure for COVID-19 remained global concerns.

As previously stated on this platform, until a cure is found the world would have to find a way to either work through COVID-19 or shut down activities completely.

This is coming a day after the Federal Government of Nigeria announced that it was putting school resumption plan on hold following the latest COVID-19 report that shows Nigeria’s confirmed cases crossed 30,000 on Wednesday.

In the United States, more than 60,000 new COVID-19 cases were reported on Thursday, forcing lawmakers to start contemplating the second phase of COVID-19 lockdown.

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Economy

We Are Losing N13.9bn Monthly Because FG Caps Tariff – Discos

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Discos Says it is Losing N14bn Monthly Because of NERC Capped Tariff

The Nigerian power Distribution Companies (Discos) have said they a losing N13.9 billion in revenue every month because the Nigerian Electricity Regulatory Commission, limited how much they can charge for consumption.

Ernest Mupwaya, the Managing Director, Abuja Electricity Distribution Company, made the statement during a presentation on behalf of the Discos to the House of Representatives Committee on Power.

The statement was after the Discos demanded realistic indices before the implementation of the proposed service reflective tariff, which was supposed to be implemented on July 1.

Mupwaya said there were some outstanding requirements before the service reflective tariff could be implemented.

“One of them is the removal of estimated billing caps. The financial impact of the Capping Order is an average loss of N13.9bn monthly, thereby, undermining or jeopardising the minimum remittance requirement,” Mupwaya stated.

The July 1 service tariff implementation was halted by members of the National Assembly, who prevailed on the Discos to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.

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Economy

Gbajabiamila Says Nigeria Can’t Compete in AfCFTA With Weak Industries

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Nigeria Must Ramp up Industrialisation to Prevent Dumping by Other Nations

The Speaker of the House of Representatives, Femi Gbajabiamila, has said the nation can not compete effectively in the African Continental Free Trade Area (AfCFTA) with weak industrialisation and manufacturing activities.

Gbajabiamila disclosed this while receiving Adesoji Adesugba, the newly appointed Managing Director of the Nigeria Export Processing Zones Authority.

The details of the visit were made public on Thursday in a statement titled, “AFCFTA: House Speaker tasks Nigeria on industrialisation through free trade zones.”

Gbajabiamila was quoted as saying “We must act proactively so that we don’t become a dumping ground for other African nations.

“Our best option in this circumstance is to immediately set machinery in motion to ensure the effective functioning and flourishing of our export processing zones.

“We must remove all bottlenecks and perfect all stumbling blocks. We will then be fully prepared for AfCFTA and also generate massive jobs for our unemployed youths and enhance our foreign earnings.”

He added that the nation must as a matter of national emergency ramp up industrialisation through free trade zones and other effective means to compete with South Africa, Africa’s most industrialised economy and other African nations.

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