The Nigerian Federal Government is projected to generate approximately N124.26bn per year through the implementation of a 0.5% import tax on goods, as outlined in the Finance Bill 2023. Former President Muhammadu Buhari signed the bill into law on May 28, 2023, imposing a levy on goods imported into Nigeria from outside Africa. The legislation states that a 0.5% levy will be levied on all eligible goods imported into Nigeria from non-African countries. The generated revenue will contribute to capital contributions, subscriptions, and other financial obligations to various multilateral institutions, including the African Union, African Development Bank, African Export-Import Bank, ECOWAS Bank for Investment and Development, Islamic Development Bank, United Nations, and other institutions designated by the Minister of Finance.
In 2022, Nigeria imported goods worth N24.85tn from outside Africa, according to data from the National Bureau of Statistics. Applying a 0.5% base tax to total non-African imports translates to N124.26bn. It remains uncertain whether the 0.5% import tax will be applicable to all goods.
The Federal Government asserts that this new revenue stream will ensure the sustainability of its obligations to multilateral organizations. It aims to use this funding to meet its financial commitments effectively.
A blog post by the Hong Kong Trade Development Council suggests that the import levy could help Nigeria reduce its public debt profile. However, it also points out that customers may bear the brunt of the policy, leading to increased costs for imported goods.
The blog post states, “The import levy aims to lower Nigeria’s public debt, which increased from N39.56tn ($88.6bn) in December 2021 to N42.84tn in June 2022. While the import levy will boost government revenues, according to some experts, it may also raise the costs of imported goods for end consumers, thereby adding to inflationary pressures. Nigeria’s inflation rate grew from 15.60% in January 2022 to 21.47% by November 2022.”
In a report titled “Tweaking the 2023 Finance Bill and Options for Unlocking Revenues,” Dr. Muda Yusuf, the Director of the Centre for the Promotion of Private Enterprise, argues that the 0.5% levy on all imports from outside Africa will burden both businesses and citizens. He emphasizes that this measure will increase operating expenses, production costs, and inflation in the economy. Dr. Yusuf warns, “Most equipment, machinery, ICT equipment, and medical equipment are all imported from outside Africa. Imposing a levy of 0.5% on this group of items will be detrimental to investment, economic growth, and the welfare of citizens.”
Chris Uwadoka, an economist based in Abuja, views the new tax as a fiscal measure well within the government’s capacity. He acknowledges that in order to fulfill its debt obligations, the government must adopt measures to ensure it meets all financial commitments.
As the implementation of the 0.5% import tax takes effect, its impact on the Nigerian economy and citizens’ cost of living remains a topic of interest.
