CPPE sends SOS to CBN amidst 28 exchange rate tweaks in Q1 2024

Onome Amuge

The Central Bank of Nigeria’s (CBN’s) frenzied exchange rate adjustments, a total of 28 changes in the first quarter of 2024, have plunged Nigeria’s trade dynamics into a whirlpool of uncertainty, casting doubt over the nation’s economic future, according to the Centre for the Promotion of Private Enterprise (CPPE).

The CPPE, regarded as a proponent of the free enterprise model, sounded an urgent alarm, as Nigeria’s business community was beset by the unpredictable force of exchange rate volatility, a chaotic element that held sway over customs duty and plunged businesses into a sea of uncertainty, causing waves of disruption and uncertainty in the nation’s economic landscape.

A statement signed by  Muda Yusuf, the CPPE chief executive officer, noted that the frequent changes in the Customs duty exchange rate have become a huge burden on the business community.  

This has led to heightened cargo clearing costs, aggravated investment risks, and worsening inflationary pressures, especially in the real sector of the economy, it explained. 

The CPPE also noted that these frequent changes are profoundly detrimental to production, planning and other real sector activities, casting a shadow of unpredictability across the Nigerian economy,

The report stated further: “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/$.  It was less than N1200/$ a 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 a high level of unpredictability in the international trade ecosystem. This is not consistent with our growth aspirations at this time,” the CPPE stated.

Seeking to tame the wild fluctuations in the customs duty exchange rate, the Centre for the Promotion of Private Enterprise issued a clarion call to the Central Bank of Nigeria, urging the adoption of a framework that would serve as a ship’s anchor, stabilising the exchange rate and safeguarding investor confidence. With this solution, the CPPE hopes to bring a sense of calm to the turbulent waters of the Nigerian economy, forging a path to economic growth and stability for businesses and investors alike.

The CPPE suggested a quarterly customs duty exchange rate as a means to stabilise the exchange rate. It also proposed a commencement rate of N1000/$ Customs duty exchange rate.  

The Centre also called for close collaboration between the CBN and fiscal authorities, acknowledging that such a partnership would serve as a compass to guide the nation’s economic course.