Taiwo Oyedele, former PwC Nigeria partner and now chair of the Presidential Committee on Fiscal Policy and Tax Reforms, proposing a startlingly simple idea in Nigeria’s chaotic economic landscape – keep the Customs import duty rate fixed at N800 to the dollar for the rest of 2024.
In a country where the Customs Service has changed its exchange rates around 40 times this year alone, swinging between N900 and N1,700 per dollar, Oyedele suggestion sounds almost quaintly rational. Yet, it could be exactly the kind of stability tonic Nigeria’s battered business sector desperately needs.
The tax expert’s logic is straightforward: the government based its budget on N800/$, so why not extend that assumption to import duties? This would provide a stable planning horizon for businesses, a stark contrast to the current fiscal wild west where duty rates can change twice in a single day.
Dr. Muda Yusuf of the Centre for the Promotion of Private Enterprise supports this thinking, having earlier proposed quarterly duty rates set between N800 and N1,000 per dollar. Both experts recognize that the Customs Service’s practice of mirroring every twitch in the official forex market is wreaking havoc on business planning.
Critics might argue that fixing rates artificially low creates distortions, incentivizes imports over exports, and potentially costs the government revenue. However, proponents counter that the stability gained would boost overall economic activity, increasing total duties collected. Moreover, in a year of such extreme volatility, even an imperfect anchor is better than none.
But Oyedele committee isn’t stopping at import duties. They’re proposing a radical centralization of Nigeria’s tax machinery, suggesting the collapse of over 100 different federal, state, and local tax agencies into a single Nigerian Revenue Service. It’s an audacious proposition aimed at streamlining a bewilderingly complex tax system.
Furthermore, the committee advocates for zero-based budgeting and long-term appropriation, pushing for clearer budget classifications under headings like infrastructure, human capital, and debt service. These are weighty reforms that strike at the heart of Nigeria’s often opaque fiscal practices.
What’s refreshing about Oyedele’s recommendations is their pragmatic clarity. They eschew academic theorizing or bureaucratic jargon, instead offering concrete, actionable steps. For import duties, Oyedele proposes a fixed N800 rate. For tax complexity, he suggests one central agency. For budgetary confusion, he calls for a clear, long-term structure.
There’s a pleasing simplicity to these ideas that contrasts sharply with Nigeria’s typically byzantine policy discourse. They reflect an understanding that in a country grappling with overlapping economic crises, policymakers must prioritize intelligibility and predictability.
Yet, the very audacity and rationality of these proposals underscore the depth of Nigeria’s fiscal dysfunction. That a suggestion as basic as “let’s stick to one exchange rate for the year” is seen as groundbreaking shows how far the country has strayed from sound economic management.
The question now is whether these commonsense recommendations can penetrate Nigeria’s labyrinthine bureaucracy and vested interests. Will the Customs Service, accustomed to its daily rate adjustments, accept a fixed N800 rate? Will myriad tax agencies willingly cede power to a centralized body? Will budget makers embrace transparent long-term planning?
Oyedele’s committee has thrown down the gauntlet, offering a roadmap out of Nigeria’s fiscal chaos. Their proposals may seem radical only because the status quo has become so irrational. The ball is now in the government’s court to either embrace this voice of reason or continue the bewildering improvisations that have left businesses and citizens reeling.
Reference
Presidential tax committee recommends N800/$ Customs duty rate published in Vanguard