By Eugene Nweke
As stated this morning on a platform discuss, there is need to really understand how it goes with us in the corridor of international trade and freight logistics services.
Firstly, is to appreciate that, we may not be an economists, but our professional training in the field of international trade finance, gives me a better clarity and understanding with regards to international trade transactions and applicable rules.
The freight forwarders are actually not against the efforts of the government towards stabilizing the naira, and the noticeable gains made so far, the impact and reality of such gains is our concern.
What the international traders and freight forwarders are saying is simply, that such efforts should be deliberately and evenly integrated without killing or hampering trading activities in the country.
Earlier in the year, our sister, Dr. Okonjo Iweala was globally watched, urging governments of the world to deploy or inject more capitals into trading activities, as a key factor of stabilization in their country’s foreign exchange activities and for stable performances. This according to her is a sure escape to ailing economic recession.
Then, have you taken time to monitor the Nigeria Stock Exchange market and evaluate its daily activities and performances, and am sure when you do, your guesses will be as good as mine.
So for the CBN to resorts into easy fix applications by using customs platform as quasi exchange market portal, is to say the least, an open misapplication by a monetary policy essence by a regulator who rather thinks a straightjacket approach as opposed to encourage a sustainable fixed exchange rate for trade valuation.
Else, how do one reconcile the fact that, this morning 16th April, 2024, in the parallel (black) market, “mallams” are selling $1 at ₦1030 and buys $1 at ₦960:00. Meanwhile, the official exchange rate on the Nigeria Customs Service (NCS) portal for payable import duty calibration as at today 16th April, 2024 stands at N1, 238:17 per $1.
The implications is that while it is assumed that the naira is gradually gaining supremacy over the dollar, the reality is that such gains does not reflect in the prices of products in the market. This is because the imports value and clearing cost out of the port promote inflation while other factors that promote capital flight in the supply chain are still even.
When you take a closer look at some African ports, many are reducing cargo handling charges in response to this directive. It cannot be same here for the reasons which all of us know, which is through foreign exchange rate is affecting the cost of terminal operational and berth production capacity, which the operators has to grapple with on a daily basis.
We are appealing to the government is to tailor a responsive monetary policy in a manner that it doesn’t suffocate an industry and this is doable.
At least, a check on the present cargo throughputs in our ports and in comparison to volume recorded within same period in the previous months in the past years, does not point to an increase in traffic.
So many issues rose in this regards but to support that the CCPE advice is apt.
The emphasis here is that the present situation is responsible for the rapid nosedive of trading activities, importation being stifled on account of import occasioned by gross unpredictability in trade forecasts/budgeting in relations to transaction and shipping. This also hampers the role of the foreign investment activities.
A friend noted that, “The bane of the Nigerian economy is that our fiscal policies are not friendly at all. No matter what the CBN tries to do, the objective of the people at the ministry tilts towards improved revenue generation and every policy is tilted towards that”.
He noted that, competitiveness and stability of other sectors is key especially in the face of port sector with fiercely competing ports within the nearby neighboring ports, as such there is absolute need to tinker with our fiscal and monetary policies to reflect the realities of our situation. It is either as a deliberate insensate policy or not knowing what to do, we prefer the straight jacket method thereby placing a lot in jeopardy”
Permit me to add that, the idea behind the UCP-600 (Uniform Customs and Practice for Documentary Credit) is to enable Customs administration to sustain a fixed exchange rate to support trading activities and protect it from undue incidences of forex fluctuations.
This is why the Form M rules provides that the life span of a Form M opened in the bank and approved by the CBN for forex biddings was initially at 90 days duration and the application entails that the approved forex rate on the Form M shall be the applicable Customs exchange rate at the point of import clearance but that is on ideal premise, but not so under the present circumstances.
Wherefore, Customs are encouraged by the government to sustain a fixed exchange rate regime (and not resorting to an off and on application). This is because it helps to shape up in stabilizing the value of products in the market.
For us, our core duty is to encourage the seamless movement and even distribution of trade across board at the most economic costs.
We have made cases for the freight forwarders inputs to be sought during fiscal and monetary policies formulations but often we are treated as inconsequential by the know it all policy makers in the past, but deep down, we know too well that our inputs counts.
To say the least, we believe that we can collectively do and indeed manage the policy process better. As such, we urge authorities to come down from the high pedestals and discuss trade policies in practical terms and not in parenthesis.
It is needless to re-emphase that the NCS is a mere revenue policy enforcement arm of the government. It is pertinent to state that in the past, its own advice on trade policy and impact analysis were not considered before certain policy formulations.
The NCS do understands that in a continuous and stable trading activities, their performances is even and appreciate most by the consuming public.
Someone points finger to the corruption in the system and I make bold to posit that the irony of is that unknowingly, the so-called noticeable corruption in the system, to a larger extent is actually being promoted and sustained by the same non interrogated fiscal and monetary policies applications of the past.
If we juxtapose the present situation to the essence of critical international conventions and their requisite business implications for trade liberalization and facilitation, especially weighing the impact of the present exchange rate regime in the face of our participation in AfCTA implementation, only then, you will appreciate the level of challenges at hand and ahead.
Thank you
*Dr. Eugene Nweke, a registered freight forwarder and former National President of NAGAFF, writes from Lagos.
