FG Moves to Waive Import Duties on Essentials to Curb Inflation

President Bola Tinubu

THE Federal Government has reportedly launched a plan to temporarily lift import duties on essential items like staple foods, medicines, and other vital commodities for an initial six-month period. This move aims to combat inflation and is outlined in the forthcoming Executive Order, titled 'Inflation Reduction and Price Stability (Fiscal Policy Measures) Order 2024'.

The order, which was due to be signed in April but lacked the President's signature, also proposes waiving levies on crucial items like fertilizers, poultry feed, flour, and grains. Additionally, it mandates the Ministry of Finance and the Central Bank of Nigeria (CBN) to develop a strategy for offering low-interest loans to key sectors such as agriculture, pharmaceuticals, and manufacturing.

“The import duty and other tariffs are to be suspended on the following for six months: Staple food items; Raw materials and other direct inputs used for manufacturing: Inputs for agriculture production including fertilizers, seedlings, and chemicals, Pharmaceutical products, Poultry feeds, flour and grains,” the document read in part.

The President is contemplating a temporary exemption from Value-Added Tax (VAT) for several essential goods and services, including Automotive Gas Oil, staple food items like noodles and pasta, and raw materials used in food production. Additionally, VAT suspension is being considered for electricity, public transportation, agricultural inputs and produce, and pharmaceutical products for the rest of the year, aiming to provide relief and support to citizens and key industries.

“Suspension of Specific Taxes and Levies: For six months, the order suspends various taxes and levies, such as road haulage tax and other transportation- related charges; fees on bicycles, trucks, canoes, wheelbarrows, and carts; business premises registration; taxes and levies on shops, kiosks, and markets; animal trade and produce sales tax.”

According to the government's Accelerated Stabilization and Advancement Plan (ASAP) report, the importation of paddy rice and maize is being considered to address the country's food insecurity challenges. The report recommends an executive order to facilitate the importation of paddy rice for local millers, aimed at curbing the rising food inflation nationwide.

The ASAP report outlines several measures to support the plan, including the suspension of import duties and Value-Added Tax (VAT) on specified essential items, such as paddy rice imported by millers, and the implementation of a fixed exchange rate for import duties. However, this proposal appears to contradict President Tinubu's earlier statements this year, where he expressed opposition to food imports, highlighting a potential shift in the government's stance on addressing food security challenges.

During a meeting with state chairpersons of the All Progressives Congress (APC), President Tinubu declared that his administration would not allow food imports, instead, it would focus on turning scarcity into abundance in the country, aiming to achieve self-sufficiency and transform the nation's food landscape.

“Fertilisers are being supplied to farmers as we speak. Agriculture and economic diversification provide the answers to our problems.

“We will not continue to Import food. We know how to turn lack into abundance, and the world will watch us do it again,” he said.

Nigeria is on the brink of a devastating food crisis, which poses a grave threat to the country's stability and security. The alarming surge in food prices has resulted in a skyrocketing food inflation rate of 40.5 percent, exacerbating the already dire situation and leaving millions of Nigerians vulnerable to hunger and malnutrition.

Rice, a fundamental food staple, has been severely affected, with prices skyrocketing by 169 percent over the past year. The cost of a bag of rice reached an all-time high of nearly N90,000 in March and April, exacerbating the already precarious economic situation and putting immense strain on households across the country.

The staggering rise in food costs is having a devastating impact on the economy, with approximately 31 million Nigerians predicted to face severe food shortages by August this year. In a bid to mitigate this crisis, President Tinubu plans to issue an executive order suspending the payment of taxes and levies in foreign currency, aiming to ease the burden on citizens and stimulate economic recovery.

To help ease the strain on the naira, the executive order mandates all tiers of government and their respective agencies to give preference to purchasing goods and services produced in Nigeria, promoting local content and supporting the growth of domestic industries.

According to the document, “Governments at all levels and their agencies shall patronize MADE IN NIGERIA goods and services to the extent possible.

“Payments of taxes and levies in foreign currency shall be discontinued to enable the payers to pay in Naira while non- critical spending plans by any MDA involving foreign exchange cost shall be put on hold. States and local governments are encouraged to support these tax suspensions to ensure broad- based relief for businesses and consumers.”