In a bid to ameliorate the escalating cost of food items in the country, President Bola Tinubu has approved the implementation of zero percent import duty and value-added tax (VAT) exemption on essential food commodities.
The policy, effective from July 15 to December 31, 2024, is expected to provide relief to consumers burdened by inflation.
A circular issued on Wednesday outlined the approved food items, which include maize, millet, rice, wheat, husked brown rice, grain sorghum, and beans. These commodities previously faced import duties ranging from 5 to 30 percent.
Government’s Intervention to Cushion Food Inflation
The decision to waive import duties on these staple foods is a direct response to the rising cost of living, which has become a significant concern for Nigerians. The government aims to increase the supply of these commodities in the market, thereby stabilizing prices and making them more accessible to the populace.
However, the policy comes with specific conditions. Importers must meet certain criteria, including incorporation in Nigeria, a minimum of five years of operation, and a clean tax record. Additionally, companies importing specific items like husked brown rice, grain sorghum, or millet must own a milling plant with a capacity of at least 100 tons per day and have been operating for at least four years.
Tightening the Reins on Importation
To ensure the policy’s effectiveness, the Nigeria Customs Service (NCS) has outlined stringent guidelines for importers. A key provision mandates that at least 75 percent of imported food items must be sold through recognized commodities exchanges. This measure is designed to prevent hoarding and price manipulation.
The NCS will maintain a list of approved importers and their quotas, facilitating the importation process while ensuring compliance with the policy’s objectives. Non-compliance with these regulations will result in penalties, including the revocation of waivers and the imposition of applicable taxes and duties.
Industry Reactions
While the policy has been generally welcomed by consumers, industry stakeholders have expressed mixed reactions. Some importers have lauded the move as a significant boost to their businesses, while others have raised concerns about the stringent conditions attached to the policy.
Agricultural producers, on the other hand, have expressed apprehension about the potential impact of increased imports on domestic production. They have called for measures to protect local farmers and ensure a level playing field.
The government anticipates that the policy will significantly impact food prices, making essential commodities more affordable for Nigerians. The move is seen as a crucial step in addressing food security challenges and stabilizing the economy.
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If You Ask Me
The introduction of zero import duty on basic food items is a bold step by the government to address the pressing issue of food insecurity in Nigeria. While challenges lie ahead, the policy has the potential to alleviate the burden on consumers and contribute to overall economic stability.
However, the success of the policy hinges on several factors. Effective implementation by the NCS, cooperation from importers, and the absence of unforeseen challenges will be crucial to its success. Additionally, the government must closely monitor the impact of the policy on domestic production to avoid discouraging local farmers.
Additionally, sustained efforts to boost domestic production, improve agricultural infrastructure, and enhance food distribution systems are equally important to achieve long-term food security.
