The Federal Government of Nigeria is preparing to implement a temporary suspension of import duties on essential goods such as staple foods and pharmaceuticals in an effort to curb soaring inflation, according to a document reviewed by The PUNCH.
The Executive Order, titled “Inflation Reduction and Price Stability (Fiscal Policy Measures) Order 2024,” outlines plans to waive import duties on various items for an initial six-month period. Although the order has not yet been signed by President Bola Tinubu, it is expected to be formalized soon.
Key Provisions of the Executive Order
The draft of the Executive Order details several critical measures:
– **Suspension of Import Duties and Tariffs**: The suspension will cover staple food items, agricultural inputs (including fertilizers and seedlings), pharmaceutical products, poultry feed, flour, and grains. This measure aims to reduce costs and alleviate inflationary pressures on essential goods.
– **Value-Added Tax (VAT) Suspension**: The order also proposes suspending VAT on items such as Automotive Gas Oil, basic foodstuffs, semi-processed food items like noodles and pasta, raw materials for food manufacturing, electricity, public transportation, agricultural inputs, and pharmaceuticals for the rest of the year.
– **Low-Interest Loans**: The Ministry of Finance and the Central Bank of Nigeria will develop plans to offer low-interest loans to sectors such as agriculture, pharmaceuticals, and manufacturing to stimulate economic activity and production.
Addressing Economic Concerns
The proposed fiscal measures come at a time when Nigeria is grappling with severe food inflation. Food prices have surged dramatically, with rice prices, for instance, increasing by 169% over the past year. This has led to widespread economic strain, with an estimated 31 million Nigerians facing the threat of severe food shortages by August 2024.
President Tinubu’s administration is also considering suspending specific taxes and levies, such as road haulage tax and other transportation-related charges, and business premises registration fees. This suspension is intended to provide broad-based relief to businesses and consumers.
Contradictions in Policy Statements
The new measures appear to conflict with earlier statements made by President Tinubu, who previously emphasized a shift away from food imports towards domestic production. During a meeting with state chairpersons of the All Progressive Congress, Tinubu asserted that his administration would focus on turning scarcity into abundance through local agricultural initiatives.
Reaction and Implementation
Economic experts and stakeholders have generally welcomed the proposed measures. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, praised the Accelerated Stabilisation and Advancement Plan (ASAP), which encompasses the new fiscal policies.
“The proposed plan is a commendable step by the Finance Minister. It addresses key issues that have been plaguing real sector investors, such as high interest rates and costly import duties,” Yusuf said. He urged for swift implementation to ensure that the benefits are realized promptly.
Financing the Economic Plan
To finance these economic interventions, the government may need to borrow an additional N7.24 trillion in 2024, pushing the total projected borrowing for the year to N16.42 trillion. This additional borrowing is anticipated due to expected revenue shortfalls and the need to fund the expansive economic intervention plan.
The plan, presented by Finance Minister Wale Edun, aims to tackle the significant challenges facing the country’s economic reform initiatives and stimulate growth across various sectors.
Bottom Line
As Nigeria navigates through economic challenges, the proposed suspension of import duties and other fiscal measures reflect a responsive approach by the government to stabilize prices and support the economy. The successful implementation of these policies will be crucial in mitigating the adverse effects of inflation and ensuring economic stability.
