Peter Obi reacts to CBN’s 9% increase in customs exchange rate.

Just days after reducing the exchange rate for Customs cargo clearance, the Central Bank of Nigeria (CBN) has increased it by nine percent, from N1,515.48 to N1,605.82 per dollar. This inconsistency has drawn criticism from Peter Obi, the Labour Party’s presidential candidate in the 2023 election. Obi urges the government to address these fluctuations, which negatively impact the business environment. The new rate, already reflected on the Nigeria Customs Service (NCS) portal, has further frustrated importers.

CBN made several adjustments to the exchange rate

NAIJAEYES reported that the CBN made several adjustments to the exchange rate throughout the past year. On June 24, 2023, the rate was adjusted to N589/$, followed by another adjustment to N770.88/$ on July 6, 2023. Subsequent adjustments occurred on November 14, 2023 (N783.174/$), December 2023 (N951.941/$), February 2, 2024 (N1,356.883/$), and February 3, 2024 (N1,413.62/$). Further changes were made on February 10, 2024 (N1,417.635/$), February 11, 2024 (N1,444.56/$), and February 14, 2024 (N1,481.482/$). The rate was reduced to N1,472.756/$ on February 16, 2024, and increased again to N1,605.82/$ on February 21, 2024.

Our Correspondent also reports that the incessant increases have impacted negatively on the trade volume at the Nigerian ports as some importers have abandoned their goods at the ports while others have opted for ports in the neighboring countries.

Obi urged the Federal Government of Nigeria to cease the inconsistent duty charges.

However, in response to the situation, Obi, a businessman and politician, stated in a message on his verified X handle (formerly Twitter) @PeterObi, that prioritizing high Customs revenues over the survival of local businesses, employment, and reasonable cost of living would harm the nation’s economy.

Obi urged the Federal Government of Nigeria to cease the inconsistent duty charges, emphasizing that they were negatively affecting businesses and the cost of goods in the local market.

He emphasized, “The arbitrary and ever-increasing Customs duties are now detrimental to businesses and the cost of goods, posing a significant threat to the economy. The federal government must take urgent action to address this issue.”

This inconsistency leads to losses and contributes to inflation

In a scenario where importers start the importation process based on a specific exchange rate, such as N1000 to $1, and later find out upon arrival of goods in Nigeria that duties are calculated at a different rate, say N1400 to $1, it poses significant challenges for businesses. This inconsistency leads to losses and contributes to inflation, resulting in higher costs of goods and living. Consequently, it may lead to business closures and job losses as calculations were initially based on the prevailing exchange rate and market prices.

If not addressed, importers may opt to use ports in neighboring countries, which would reduce productivity in our ports and worsen the economy due to revenue loss.

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Equity market sustains decline with N730bn loss.

The Nigerian equity market experienced a second consecutive day of losses this week, shedding N730 billion on Tuesday.

The previous day, market giants like Dangote Cement and MTN Nigeria had contributed to a significant loss of N1.82 trillion.

On Tuesday, the benchmark index, the All-Share Index, and the market cap declined by 1.30 percent to 101,060.67 points and N55.298 trillion, respectively.

The year-to-date return for the market also decreased further to 35.16 percent from 36.94 percent the previous day.

The bearish trend was driven by sell-offs observed in medium to penny stocks.

The bearish trend was driven by sell-offs observed in medium to penny stocks.

By the end of trading, eight equities registered gains while 43 experienced losses.

The top gainers included stocks of Juli Plc, Eterna Plc, and VeritasKap, which saw increases of 9.94 percent, 6.17 percent, and 5.97 percent, respectively, closing at N1.77, N17.20, and N0.71.

Leading the losers’ chart was Honeywell Flour Mills.

Leading the losers’ chart was Honeywell Flour Mills, which experienced a 10 percent decline, closing at N3.60. BUA Cement also saw a significant drop of 9.98 percent, closing at N142.95, while PZ Cussons, reporting negative asset value in its half-year report, dipped by 9.75 percent to N27.30.

Trading activity declined further, with total deals, volume, and value recording significant decreases. Total deals fell by 9.34 percent to 8,783 trades, while total volume and value decreased by 6.46 percent and 10.90 percent to 256.16 million units and N6.63 billion, respectively. The number of stocks traded on Tuesday closed at 118.

Four out of the five sectoral sub-indexes closed in the red zone, with the Oil & Gas sector being the sole gainer for the day, driven by Eterna Plc.

The volume and value drivers of the market trend for the day were United Bank for Africa, Geregu Power, and Transcorp Plc. Transcorp emerged as the most traded security in terms of volume, with 39.75 million units changing hands in 640 trades, while Geregu Power led in terms of value, totaling N1.11 billion.

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