Imported vehicles: Dealers threaten shutdown over 15% levy - AfrobadooTV
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Imported vehicles: Dealers threaten shutdown over 15% levy

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As controversy continues to surround the introduction of 15 per cent National Automobile Commission levy imposed on imported used vehicles by the Nigeria Customs Service, car dealers have threatened to close their stores this week.

The NCS had recently introduced a 15 per cent National Automobile Commission levy on used imported vehicles, a decision which didn’t go down well with clearing agents in the country’s maritime sector.

The agents argued that the NAC levy is mostly meant for new vehicles, questioning the rationale behind the introduction of the duty on used vehicles.

In a quick response, the service, in a statement by the National Public Relations Officer, Timi Bomodi, said the move was in compliance with the Economic Community of West Africa Common External Tariff.

 

The statement read in part, “On Friday the 1st of April 2022, the Nigeria Customs Service migrated from the old version of the ECOWAS Common External Tariff (2017- 2021) to the new version (2022- 2026). This is in line with World Customs Organization five years review of the nomenclature. The contracting parties are expected to adopt the review based on regional considerations and national economic policy.

“The nation has adopted all tariff lines with few adjustments in the extant CET. As allowed for in Annex II of the 2022-2026 CET edition, and in line with the Finance Act and the National Automotive policy, NCS has retained a duty rate of 20 per cent for used vehicles as was transmitted by ECOWAS with a NAC levy of 15 per cent. New vehicles will also pay a duty of 20 per cent with a NAC levy of 20 per cent as directed in the Federal Ministry of Finance letter ref. no. HMF BNP/NCS/CET/4/2022 of 7th April 2022.”

But in a chat with our correspondent in Lagos on Monday, the Lagos chapter Chairman of the Association of Motor Dealers of Nigeria, Metche Nnadiekwe, disclosed that the group would be meeting this week.

He noted that the outcome of the meeting would determine if the group was going to close their stores or not.

“How can we continue to run a system like this? This is really bad and until we get things right in this country, we are not going to move forward. We will have a meeting, come up with a strategy and take a position on that. We may stop selling and do some checks and balances because if we are going to sell the ones we have, we are definitely going to buy new ones. The issue is that no one knows the policy they may introduce next week, so, hopefully, before the end of this week, we may stop selling and know what next to do.”

The AMDON Lagos chair complained that the government was in the habit of not carrying stakeholders along when making certain policies.

“You know that the Nigeria Customs Service wakes up any time they want and try to introduce something extraordinarily without informing stakeholders.

“Some people are stakeholders in certain businesses and when you want to introduce certain policies, why don’t you consider them? Can’t you even discuss with them to know how these people are going to be affected? So, it looks as if it is a calculated attempt to deal with certain people. We don’t really know what is going on here and, remember, wherever there is this type of thing, Nigerians will be the ones that suffer it.”

He said by the time the dealers paid the levy imposed by the NCS, vehicle prices would go so high that many Nigerians would not be able to afford them.

“So, I don’t know whether it is an attempt to take us out of business or what. We keep wondering what is actually going on. Sometime ago, it was Vehicles Identification Number and now it is this one,” he concluded.

Also speaking, the General Secretary, AMDON, Tia Olaniran, said the situation was already having an adverse impact on their businesses.

PUNCH.

 

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Commerce

Appeal Court Exonerate Zenith Bank, Upturns High Court Judgement Slam Fine on Real Integrated & Hospitality Limited

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After several months of legal tussle between Zenith Bank Plc v Real Integrated & Hospitality Limited and State Universal Basic Education Board (SUBEB) Gombe State, a three-man panel in the Court of Appeal sitting in Lagos led by Justice Muhammed Sirajo in Appeal No:CA/LAG/CV/262/2022 – have unanimously upturned the Lagos State High Court judgment of Justice O. O. Abike-Fadipe over claims that; on March 8, 2022, there was a breach of contract because on October 7, 2011, Zenith Bank refused Real Integrated to withdraw from its Account No. 1012465427. In her judgment, she directed Zenith bank to pay an interest of 15 per cent per annum on the N872,780,522.84 from May 17, 2011, when the advanced payment guarantees expired till judgment and thereafter at the rate of 10 per cent per annum until final liquidation

 

Through Zenith Bank’s team of counsel led by Prof. Fabian Ajogwu, SAN and Mr Sylva Ogwemoh, SAN, the bank challenged Justice O. O. Abike-Fadipe’s decision of awarding N2,500,000 as the cost of the action in favour of Real Integrated. The legal team via valid argument backed by proofs argued and sought an order setting aside the lower court decision on the ground that it acted in full compliance with its contractual obligations in line with the Advanced Payment Guarantee (APG) contract and that the trial court was wrong. The Court of Appeal, in a unanimous decision on November 23, agreed with the bank’s submission and resolved all the issues raised in its favour. It was gathered that; the 1st Respondent, through its Counsel, E.O Jakpa, argued that the bank breached the contract while SUBEB Gombe State did not contest the Appeal.

Apart from the appellate court setting aside the judgment of Justice Abike-Fadipe, the judge also awarded a cost of N200,000 against Real Integrated & Hospitality Limited and in favour of Zenith Bank. The appeal court further stated that the lower court judgment was upturned on the ground that the trial court was wrong to have presumed that the bank withheld the full account statement of Real Integrated in the light of Exhibit C6 (the comprehensive Statement of Account of Real Integrated), which was tendered by the bank for a limited purpose, adding that there was no need for the lower court to have invoked Section 167 (d) of the Evidence Act, 2011 against the bank.

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Dollar crisis: EFCC plans massive raid on forex dealers

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The Economic and Financial Crimes Commission on Tuesday carried out simultaneous operations against Bureau de Change operators in Abuja and Kano, as the Naira slumped to N857 to a dollar at the parallel market.

The PUNCH gathered that the raids in the two cities, which netted a good number of illegal BDC operators and individuals suspected to be customers, would also be extended to Lagos, Onitsha, Ibadan, Port Harcourt and other major cities across the country.

Our correspondents learnt that the incident disrupted the day’s business as many of the BDC operators in Abuja went underground.

This is happening as the EFCC arrested the Kogi State House of Assembly candidate of the New Nigeria Peoples Party, Ismaila Atumeyi and two others with N326m and $140,500 cash.

 

The black market forex dealers were carrying on their business activity as usual when the EFCC operatives backed by armed policemen stormed their makeshift stalls located opposite the Sheraton Hotel in Zone 4, Wuse, Abuja and took many of them into custody.

An eyewitness noted that the arrested suspects were dragged into waiting vehicles as the incident stalled traffic in the area.

In the wake of the Central Bank of Nigeria’s announcement that the redesigned naira notes will replace higher notes to fight counterfeiting, inflation and insecurity with effect from December 15, the national currency has continued to be under pressure against the dollar.

The development was blamed on BDC operators and individuals desperate to convert their ill-gotten money into hard currency.

The EFCC Chairman, Abdulrasheed Bawa had endorsed the planned redesign of the naira and cautioned BDC operators against currency hoarders who would attempt to seize the opportunity to offload the currencies they had illegally stashed away.

Giving an insight into the raids in Abuja and Kano, a senior official explained that the EFCC has been monitoring the activities of forex dealers in the two cities, adding that the operations were intelligence-led.

Planned raids

He also disclosed further that the raids would be extended to Lagos, Port Harcourt, Maiduguri, Ibadan and other cities across the country to stop BDC operators from ‘destroying the naira.’

“Today’s (Tuesday) operations were successful as they were intelligence-led. We have placed various bureau de change points under watch since the CBN announced the redesign of the naira.

“So, we know that those with illegal wealth would want to take advantage of the development to off-load their stash and convert it to dollars. It is not a one-off operation; it would be extended to Lagos, Port Harcourt, Maiduguri, Ibadan, Onitsha and other cities,’’ the official disclosed.

“The EFCC spokesman, Wilson Uwujaren confirmed the raid on the forex dealers in Abuja and Kano but said he has no information on the planned operation in other cities.

“I can confirm that our operatives raided the Wuse Zone 4 area of Abuja today and arrested some BDC operators. However, I can’t confirm the number of suspects arrested yet,’’ he stated.

But speaking with The PUNCH after the raid, a forex dealer in Abuja blamed the EFCC for the crash of the local currency.

“We are all in hiding. We sell at N857/$ now. I told you it was N850/$ in the afternoon but that rate is no more possible at this time. The dollar is very scarce because the EFCC entered the market today. Maybe things will change tomorrow (today),” a forex dealer, Abubakar Attahiru, told one of our correspondents on the telephone at 6.12 pm on Tuesday.

Another BDC operator offered to buy a dollar bill at N855 as long as the seller had large sums of greenbacks.

“The more dollars you sell, the more money you make. If we buy at N850/$ from someone who has $100, we will buy at N852 from someone who has $10,000,” he disclosed.

But the Association of Bureau De Change Operators of Nigeria, Alhaji Aminu Gwaadabe, said he was fully in support of the raid.

“As an association, we are in support of the raid. We cannot be seeing a lot of irregularities and still support them. It is unlicensed people that have taken over the market. The licensed are not even allowed to operate in the market,” he complained.

He explained that his association was aware of the impact of the proposed naira redesign, which had forced many Nigerians to move towards converting their naira to dollars, noting, however, that it was not a justification for the level of uncertainties in the market.

Economists have said the only major solution to the naira devaluation and the dollarisation of the Nigerian economy is productivity .

According to them, the current situation would hurt all aspects of the economy.

For a Professor of Economics at the Nnamdi Azikiwe University, Awka, Anambra State, Uche Nwogwugwu, the major problem was the CBN’s naira redesign announcement.

“What you have seen in the parallel market is a spasm of fear in the people. Why do you need to change your currency at this time when you have inflationary pressure, falling reserves and an economic downturn?

“If all of a sudden you are compelling people to change their currencies, they will be afraid and you will certainly have this kind of situation,” he said.

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, explained that the current devaluation of the naira at over N800 to a dollar would take its toll on the budget deficit of the country.

“In this regard, it will affect the deficit. If we have depreciation in the currency, there will be a variation. So, we are likely to see contract variations by contractors. In some contractual agreements, there’s always a variation clause, such that if cost changes or some fundamental variables change, the cost of the contracts will change.

“So, the cost of government projects will increase. Operational costs will increase, just as it affects everybody because the depreciation of the currency has an effect on inflation.

“The main effects will be inflationary and if there is no adjustment to accommodate that increase, projects will not be completed because the value of the naira has been further eroded.”

Meanwhile, a senior lecturer and economist at Pan Atlantic University, Vincent Olusegun, emphasised that the Federal Government was turning deaf ears to the reality of the naira devaluation.

He said, “In Nigeria, the exchange rate is not a floated one, it is one we have fixed ourselves and not market-determined. So, the government is living in denial that as the naira depreciates every day, they can maintain the exchange rate.

“Also, the exchange rate regime in the country is not market-driven because the government can fix N400 plus to a dollar which is what we are doing. In reality, the ability of the government to meet up with the budget is becoming unrealistic because the purchasing capacity has been reduced heavily.’’

PUNCH

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Buhari backs Emefiele over naira re-design

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Amid controversies over the position of the Finance Minister, Mrs Zainab Ahmed, on the decision of the Central Bank of Nigeria, CBN, to embark on the redesigning of Naira notes, President Muhammadu Buhari said yesterday that the CBN has his support on the project.

Ahmed, at the weekend, declared that the CBN did not carry her Ministry along in the new Naira note plan, warning that the new notes could have dire consequences on the value of the Naira.

But Buhari in a statement by his Senior Special Assistant on Media and Publicity, Mallam Garba Shehu, said he is convinced the nation will gain a lot by doing so.

Speaking in a Hausa radio interview with Halilu Ahmed Getso and Kamaluddeen Sani Shawai, Buhari said reasons given by the CBN convinced him that the economy stands to benefit from a reduction in inflation, currency counterfeiting and the excess cash in circulation.

 

Naira Redesign: CBN defends plan, says it will curb terrorism, kidnapping
‘It’ll reduce high inflation’ — Moghalu backs CBN’s proposed naira redesigning
He said he did not consider the period of three months for the change to the new notes as being short.

According to him, “people with illicit money buried under the soil will have a challenge with this, but, workers, businesses with legitimate incomes will face no difficulties at all.”

Experts call for harmony

Meanwhile, economists and financial experts have harped on the need for harmony between the fiscal and monetary policy authorities while maintaining the independence of the CBN.

David Adonri, Vice-Chairman, Highcap Securities, said that, while it is important for both the CBN and the Finance Ministry to synergise on policy-making in order to achieve a better outcome, the independence of the CBN as obtained in other economies does not require the permission of even the president to undertake a project such as the redesigning of the Naira.

In his words: “The economy is managed by the government through macro-economic policies (fiscal and monetary policies); while the Federal Ministry of Finance (FMoF) is the fiscal authority, CBN is the monetary authority. They are expected to work harmoniously in policy formulation and implementation. Any discord between these authorities is detrimental to economic management.

“Before any policy is formulated by any of them, there ought to be in-depth consultation between them and thorough analyses to know the sensitivity on either side of the economy.

“Although each authority has its areas of exclusivity, which it may exercise without recourse, carrying each other along will facilitate superior policy outcomes.

“In this particular instance, the reasons for changing of currency by CBN are justifiable but there is no reason for not carrying the FMoF along for them to be prepared for the change. Where the monetary authority is independent, which we clamour for, the Central Bank does not even require permission from the President to undertake any monetary action.

“Independence of a central bank is essential so that monetary policy will not be influenced by political expediency.”

Further insight from CBN

The CBN, reacting to the position of the Finance Minister at the weekend, said it was surprised by the minister’s outburst and that due process was followed in arriving at the Naira redesign project, including obtaining the approval of President Muhammadu Buhari.

Also, the apex bank doused concerns about the cost of printing the new notes, saying they will come at no outrageous cost, printed in the country and within the budget of the apex bank.

According to a statement from the CBN’s spokesman, Mr Osita Nwanisobi, the apex bank stressed that the CBN remains a very thorough institution that follows due process in its policy actions.

According to Nwanisobi, the management of the CBN, in line with provisions of Section 2(b), Section 18(a), and Section 19(a)(b) of the CBN Act 2007, had duly sought and obtained the approval of the President, Major General Muhammadu Buhari (retd.) in writing to redesign, produce, release and circulate new series of N200, N500, and N1,000 banknotes.

However, urging Nigerians to support the currency redesign project, he said it is in the overall interest of Nigerians, and that some persons were hoarding significant sums of banknotes outside the vaults of commercial banks. This trend, he said, should not be encouraged by anyone who means well for the country.

Why Naira redesign is necessary — Moghalu

Commenting on the issue, a former Deputy Governor of the CBN, Kingsley Moghalu, said that the decision of the CBN to redesign the naira notes is a ‘necessary step’ for the good of the economy.

Moghalu averred his support for the decision in a series of tweets on his Twitter account on Friday.

He explained that the CBN is trying to gain control over the money supply in the economy.

“I fully support the Central Bank’s redesign of the Naira,” he said. “If 80% of banknotes in circulation are outside the banks, that’s troubling. The CBN obviously wants to force all those notes back into the banking system. Those with the notes must surrender to get new ones or else it becomes illegal tender after January 31 2023.

“This is also a way to withdraw currency from circulation, an unorthodox way of tightening the money supply since the country is battling high inflation.

“The flip side is that people who are holding huge amounts of cash outside the banking system for nefarious reasons will go the parallel forex market to buy hard currency, putting further downward pressure on the value of the Naira as too much Naira will be chasing too few dollars.

“I doubt it will solve inflation because there also are other major reasons for inflation such as the forex crisis, which this new move could exacerbate, as well as impact of the security crisis on food price inflation. But overall it is a necessary step.

“I just think the time window for its implementation is rather short. This will put a lot of operational pressure on commercial banks and the financial system in general. A 90-day window would have been better, but one can understand the need to avoid interfering with the elections.”

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