Port Crisis, Transit Duty Crippling Businesses, Report Laments

A N9 million transit duty on each truck originating from Nigeria to Benin Republic, poor access to foreign exchange and the crisis in the Nigerian ports constituted critical challenges facing businesses in the country, a new report has revealed.

The report, also, identified high inflationary pressures, skyrocketing gas prices, security challenges and high cost of diesel as parts of challenges stiffening the business environment in the federation.

These issues were contained in the “Business Environment Update for the Month of October 2021” released by the Centre for the Promotion of Private Enterprise (CPPE).

The report, which was signed by CPPE’s Chief Executive, Dr. Muda Yusuf, explained that the biggest challenge reported by investors across all sectors in the past month was around foreign exchange.

Practically, the report said: “All investors expressed serious concerns over this predicament. The concerns were around the following: sharp depreciation in the exchange rate, uncertainty, volatility and unpredictability of the exchange rate and liquidity problem in the official window of the foreign exchange market.”

“Investors lamented the severe impact of the punitive transit duty imposed by Benin Republic on transit goods passing through the country by road. The duty is estimated at an average of N9 million per truck. This duty payment is significantly impeding trade across the West African sub region.

“This continues to make it very difficult for companies exporting or importing by road to do so. It is essentially a blockade of movement of trucks through the Benin border.

“This is in total disregard for the ECOWAS Protocol on trade and movement within the sub region. This development has been taking a huge toll on Nigerian businesses involved in cross border trade within the sub region.

“Investors would like to see a more effective intervention by the Nigerian government to put an end to this punitive and obstructionist action by the government of Benin republic,” the report highlighted.

The report, however, observed that the economy witnessed an improvement in the activities and gradual recovery in the entertainment, hospitality, aviation, transportation, trade and commerce, food and beverage sectors, among others” during the month under review.

The report noted that the rebound in oil price in October improved the outlook for Nigeria’s foreign reserves and the capacity of the Central Bank of Nigeria (CBN) to fund the foreign exchange market.

As at October 2021, according to the report, the foreign reserves have crossed the $41 billion threshold. The impact on revenue outlook is also positive. These developments would impact positively on investor sentiments.

Despite this improvement, the report said the economy “has continued to face headwinds like high energy costs, especially the skyrocketing cost of diesel and gas; high dependence on crude oil or foreign exchange earnings.

Other challenges, according to the report, are high and increasing fiscal burden of fuel subsidy and debt service; smuggling of petroleum products to neighbouring countries in the light of the uptrend in crude oil price and uncertainties around the African Continental Free Trade Agreement (AfCFTA), especially in terms of readiness of state actors.”

“The cost of distribution of finished goods and raw materials have become prohibitive because of the sharp increases in the cost of diesel and the state of the roads.

“Additionally, delivery vehicles of many companies still suffer the challenges of multiple taxations across the country, especially on the roads. These taxes are imposed from state to state.”