The Central Bank of Nigeria (CBN) has urged the Nigeria Customs Service (NCS) and other related parties to adopt the closing foreign exchange for import duty.

The CBN said this in a memo issued by its Director of Trade and Exchange Department, Dr Hassan Mahmud, and addressed to the Nigeria Customs Service (NCS) and the general public on Friday, February 23, 2024.

Mahmud, while noting that the apex bank has reviewed the formula for fixing foreign exchange rates for Customs duty on importation said the review was to check irregular changes in the Import Duty Assessment levies applied by Customs.

He stated: “Following the liberalisation of the FX market, the CBN has noted the concern of Importers of goods and services in the irregular changes in the Import Duty Assessment levies applied by the NCS.

“These developments have further built uncertainties around the pricing structure of goods and services in the economy.

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“It is creating abnormal increase in the final sale prices of items, which is largely driven by uncertainty rather than traditional market fundamentals, with implications to near-term inflation trend.

“To this effect, the CBN wishes to advise that the NCS and other related parties adopt the closing FX rate on the date of opening Form M for the importation of goods, as the FX rate to be used for Import Duty Assessment.”

The director noted that this rate would remain valid until the date of termination of the importation and clearance of goods by importers.

Mahmud this would enable Customs and the importers to plan appropriately and reduce the uncertainties around varying daily exchange rates in determining their revenue or cost structure.

He added: “Therefore, effective February 26, the closing rate on the date of opening of Form M for the importation of goods and services will be the rates that will apply for the assessment of import duty.

“This supersedes the requirements of Memorandum 9 of the CBN Foreign Exchange Manual.

“While the CBN is mindful of the initial volatility and price distortions in the aftermath of the FX market liberalisation, the apex bank is confident that these reforms would ensure stability in the market and entrench market confidence.”

Customs had adjusted its FX rate for tariffs and duty collection to N1,413 to the dollar on February 3.

The NCS had earlier adjusted the rate from N951 to N1,356 to the dollar on February 2.

The frequent review of Customs exchange rates for computing import duty has raised concerns among Nigeria’s business community.

The Star