CBN Adjusted Exchange Rate 28 Times in 2024 Q1 — CPPE

1st May 2024

The Centre for the Promotion of Private Enterprise (CPPE) on Wednesday said the Central Bank of Nigeria (CBN) adjusted the exchange rate 28 times in the first quarter of 2024, thus pervading the nation’s trade dynamics with uncertainty and unpredictability.

In a statement signed on Wednesday by the CPPE chief executive officer, Dr. Muda Yusuf, the group said that the exchange rate volatility which determined Customs duty had become a huge burden on Nigeria’s business community.

According to the CPPE, “The frequent changes in the Customs duty exchange rate have become a huge burden on the business community. This has led to high volatility in cargo clearing costs, worsening inflationary pressures and aggravating investment risk, especially in the real sector of the economy. These frequent changes are profoundly detrimental to production, planning and other real sector activities in the Nigerian economy.

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“In the first quarter of this year, there were changes in the Customs duty exchange rate twenty-eight times. In April, the frequency of changes would be close to ten times or even more. As at 1st May 2024, the rate has jumped to N1373.65/$. It was less than N1200/$ few days before.

“It is extremely difficult for investors to plan under these unstable circumstances. The situation has introduced an unprecedented level of uncertainty and unpredictability to the international trade dynamics. Investment risk has become elevated, planning has become difficult, risk management has become challenging and investors’ confidence is being weakened.

“It is double whammy for investors to grapple with volatility in the foreign exchange market and contend, concurrently, with high level of unpredictability in the international trade ecosystem. This is not consistent with our growth aspirations at this time.

“The Centre for the Promotion of Private Enterprise [CPPE] appeals to the CBN to adopt a framework to minimize volatility in the customs duty exchange rate in line with the commitment of the present administration to bolster investors’ confidence and drive economic growth.

“Such framework should adopt a quarterly Customs duty exchange rate, after due consultation with the fiscal authorities. We propose a commencement rate of N1000/$ Customs duty exchange rate.

“Consultation with the fiscal authorities is imperative because of the trade policy implications of such decisions. It is also consistent with the commitment of the present administration to effective coordination between fiscal and monetary authorities.”