Peter Obi, the Labour Party’s presidential candidate for 2023, has publicly appealed to the federal government to address the discrepancies in the duties levied by the Nigeria Customs Service. Highlighting the issue on X (formerly Twitter), Obi pointed out that the erratic nature of customs duties negatively impacts Nigeria’s business environment. He cautioned that without rectification, importers might start favouring ports in neighbouring countries, leading to underutilisation of Nigerian ports and a consequent loss in revenue.
Obi’s concern stems from the arbitrary and escalating customs duties, which affect business operations and contribute to the rising cost of goods, exacerbating inflation and living costs. He illustrated importers’ dilemma upon initiating importation based on a specific exchange rate. They find themselves subject to duties calculated significantly higher upon the goods’ arrival in Nigeria. According to Obi, this discrepancy can lead to business losses, further business closures, and job losses.
The former Governor of Anambra State also emphasised the need for the government to maintain consistency in its policies to aid in economic forecasting and business planning. He noted that the current state of affairs, characterised by poor and inconsistent economic policies, is causing businesses to fail and manufacturers to shut down. Obi argued that the government should focus on supporting businesses, particularly in the manufacturing sector, to sustain economic growth and prevent the adverse effects of targeting high customs revenues at the expense of local businesses and employment.
Editorial:
The call by Peter Obi for the Federal Government to standardise customs duties is a critical reminder of the delicate balance between revenue generation and economic sustainability. In a country where the business environment is already fraught with challenges, the additional burden of inconsistent and arbitrary customs duties can be the tipping point for many businesses, particularly those in the import sector.
This situation threatens the viability of local businesses and risks diverting trade to neighbouring countries’ ports, which would be a significant blow to Nigeria’s economy. The potential underutilisation of Nigerian ports and the loss of revenue underscore the urgent need for policy consistency and predictability, which are fundamental to fostering a conducive business environment.
Obi’s emphasis on supporting the manufacturing sector and small businesses highlights a broader issue: the need for economic policies prioritising long-term growth over short-term gains. The government’s role in creating a stable and predictable policy environment cannot be overstated. Such an environment is essential for businesses to thrive, for investments to be made, and for jobs to be created.
As we advocate for change, it’s crucial to recognise that the health of the Nigerian economy depends on the collective efforts of both the government and the private sector. Ensuring fair and consistent customs duties is not just about protecting importers; it’s about safeguarding the broader economic ecosystem. By addressing these policy inconsistencies, Nigeria can foster a more robust, resilient, and inclusive economy.
Did You Know?
- Nigeria’s strategic location along the Gulf of Guinea makes its ports crucial for regional and international trade.
- The World Bank has emphasised the importance of consistency in economic policies for developing countries to attract foreign investment and stimulate growth.
- Small and medium-sized enterprises (SMEs) contribute significantly to Nigeria’s GDP and are essential for job creation and economic diversification.
- Inconsistent policy environments can lead to a phenomenon known as “policy uncertainty,” which has been shown to deter investment and slow economic growth.
- Enhancing customs efficiency and reducing trade barriers are among the key recommendations for improving competitiveness in African ports.
