Tinubu may suspend import duties on food, drugs

The Federal Government may have set in motion a plan to suspend the payment of import duties on staple food items, drugs, and other essential items for an initial period of six months as a measure to curb inflation, The PUNCH reports.

This was contained in an Executive Order expected to be issued by the President titled, “Inflation Reduction and Price Stability (Fiscal Policy Measures) Order 2024.”

The document, seen by our correspondent, did not include the signature of the President but was supposed to be signed in April.

The document also includes plans to waive levies on fertilisers, poultry feed, flour, and grains.

The executive order will mandate the Ministry of Finance and the Central Bank of Nigeria to devise a plan for offering low-interest loans to the agriculture, pharmaceutical, and manufacturing sectors.

“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 fertilisers, seedlings, and chemicals, Pharmaceutical products, Poultry feeds, flour and grains,” the document read in part.

The president is also likely to suspend the Value-Added Tax on Automotive Gas Oil, some basic food items and semi-processed staple food items such as noodles and pasta, raw-material inputs for the manufacture of food items, electricity and public transportation, as well as agricultural inputs and produce and pharmaceutical products for the rest of the year.

“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.”

In its Accelerated Stabilisation and Advancement Plan report, the government is considering the importation of paddy rice into the country as well as maize.

The ASAP report recommended an executive order on the importation of paddy rice to millers to stem the growing tide of food inflation across the country.

The document also recommends the following: Import duty & VAT suspension on specified items including importation of paddy rice by millers and import duty exchange rate peg

Meanwhile, the proposed plan by the federal government conflicts with earlier statements by Tinubu on food imports earlier this year.

Tinunu at an event with state chairpersons of the All Progressive Congress said his administration would not allow the importation of food but rather turn the lack in the country into abundance.

“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.

In Nigeria, a food crisis looms large, challenging the nation’s stability. Food prices have surged, with food inflation reaching 40.5 per cent.

Among the hardest-hit commodities is rice, a dietary staple. In the past year alone, rice prices have skyrocketed by 169 per cent, reaching nearly N90,000 per bag in March and April. This sharp increase in food costs is placing immense strain on households across the country, exacerbating an already fragile economy.

It’s estimated that around 31 million Nigerians may face severe food shortages by August this year.

Furthermore,  Tinubu plans to discontinue the payment of taxes and levies in foreign currency through an executive order.

To reduce pressure on the naira, the order also mandates that all levels of government and their agencies prioritise the procurement of Made in Nigeria goods and services.

A part of the document read, “Governments at all levels and their agencies shall patronise 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.”

Commenting, the Chief Executive Officer, the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf applauded the stabilisation plan, stating that the plan when implemented will address burning economic issues bothering real sector investors.

Muda, speaking in an interview said, “The proposed Accelerated Stabilisation and Advancement Plan is a laudable proposition coming from the Finance Minister. It addresses many of the burning economic issues bothering real sector investors.

“The plan contains robust and comprehensive fiscal policy measures that stakeholders in the real economy had clamoured for over the past year. It addresses the concerns of investors on high interest rates, high cost of cargo clearance at the ports, and high import duty regimes.

“The relaxation of import duties on critical raw materials for manufacturers would calm the raging inflationary pressures in the economy, especially food inflation.  The fiscal measures reflect the responsiveness of the administration to the concerns of investors in the real economy. We urge for expeditious implementation of the plan, once approved by the president.”

Meanwhile, the Federal Government may borrow an additional N7.24tn in 2024 to fund its economic intervention plan.

This was revealed during a presentation of the ASAP plan by the Minister of Finance, Wale Edun designed to address key challenges affecting the reform initiatives and stimulate development in various sectors of the economy.

The government already intends to borrow N9.18tn to fund its deficit in the year. The intervention financing will cost an additional N7.24tn, pushing the total debt for 2024 to N16.42tn.

This borrowing is anticipated due to an expected lag in revenue, and according to the government’s admission, the incremental spending that would accrue because of the intervention funding would hurt leverage metrics if it is entirely funded by additional borrowing only.