FG Approves Duty-Free Rate To Curb Rising Food Cost In Nigeria
Following the approval of a 100 per cent Duty-Free Rate and Value Added Tax VAT) exemption on select basic food items, the federal government has unveiled guidelines on the policy’s implementation, to tame the rising cost of food and stimulate domestic agricultural growth.
The guides came as the Consumer Price Index (CPI), which measures the rate of change in prices of goods and commodities, eased to 33.4 per cent in July, compared to 34.19 per cent in the preceding month.
The implementation guidelines titled, “Regulation for the Implementation of the Customs, Excise Tariff, Etc. Variation Order 2024,” signed by Minister of Finance and Coordinating Minister of the Economy, Wale Edun, is aimed at controlling and reducing food price inflation through waivers, duties, VAT and tariffs payable on the importation of basic food items.
Edun had some days ago directed the Nigeria Customs Service (NCS) to commence the implementation of the duty-free import of select food items from yesterday (August 15) through December 31, 2024.
The government listed the objectives of implementation guidelines of the new policy drive to include providing a framework for the implementation and administration of the Customs, Excise Tariffs, etc.
Order 2024 for the purpose of controlling and reducing food price inflation by waiving levies, duties, value added taxes and tariffs payable on the importation of basic food items; stimulating domestic agricultural value chain, in particular, cultivation of staple food items, food processing industry; and having a direct effect on investment in the agricultural sector and its value chain.
On application and eligibility for participation, the guidelines said, “These regulations shall govern the participation in, administration and operation of, the basic food import scheme to plug the domestic food supply shortfall.”
It stated that any company, duly incorporated and existing under the laws of the Federal Republic of Nigeria, may apply subject to the satisfaction of certain conditions.According to the guidelines, such a company must have been carrying on business for a period of not less than five years after its incorporation. It must equally have duly filed its annual returns and financial statements for a period of five years immediately preceding the date of the application.It must also have been registered with the Federal Inland Revenue Service and paid its taxes and all statutory payroll deduction obligations for a period of five years immediately preceding the application.In the case of a company applying for authorisation to import husked brown rice, grain sorghum, or millet, it must show ownership of milling plant with capacity of not less than 100 tons per day and must have owned and operated the milling plant for a period not less than four years immediately preceding the application.The company must also show proof that it owns and/or controls such area of arable farmland sufficient to cultivate the quantity of the basic food, which the company is applying to import.In the case of a company applying for authorisation to import maize, wheat, or beans, it must be an agricultural company, which owns and/or controls such area of farmland sufficient to cultivate the quantity of the basic food items, which the company is applying to import; or a feed mill or other agro-processing company with an out-grower network sufficient to cultivate the quantity of the basic food items that the company is applying to import.Not less than 75 per cent of the imported food items and any food products made therefrom shall be sold to the market through recognised commodities exchanges as may be designated by the minister, the guidelines added. it also said, “Notwithstanding the foregoing, all transactions, including, without limitation to, sales and storage of such food items and any products made therefrom shall be recorded with recognised commodities exchanges as may be designated by the minister.“The company shall maintain comprehensive records of all transactions and processes undertaken by it arising from, in connection with, or related to the imported food items and the government shall be entitled to receive on demand all such information or record as it deems fit to verify compliance by the company.”In a statement issued yesterday, Director, Information and Public Relations, Federal Ministry of Finance, Mohammed Manga, said, “This regulation provides a framework for the implementation of the Customs, Excise Tariffs etc. Order 2024, aimed at controlling and reducing food price inflation by waiving levies, duties, value-added taxes, and tariffs payable on the importation of basic food items.“With the introduction of these regulations, Nigeria is poised to witness a significant reduction in food price inflation, increased investment in the agricultural sector, and enhanced food security.“HM Edun reiterated the federal government’s commitment to creating an enabling environment for economic growth, and this regulation is a testament to that commitment.”Manga quoted Edun as urging all eligible companies to take advantage of the opportunity to contribute to Nigeria’s food security and economic development.Meanwhile, the National Bureau of Statistics (NBS) stated that inflation eased to 33.4 per cent in July, compared to 34.19 per cent in the preceding month.Year-on-year, headline inflation rate was 9.32 per cent higher, compared to 24.08 per cent in July 2023.According to the CPI report for the month under review, month-on-month, inflation stood at 2.28 per cent in July compared to 2.31 per cent in June.However, year-on-year, food inflation increased to 39.53 per cent compared to 26.98 per cent in July 2023, while the index decreased month-on-month to 2.47 per cent, compared to 2.55 per cent in June.“All items less farm produces and energy” or core inflation, which excludes the prices of volatile agricultural produces and energy, increased to 27.47 per cent year-on-year in July, compared to 20.47 per cent in the corresponding period of 2023.Month-on-month, core inflation was 2.16 per cent in July, compared to 2.06 per cent in June.NBS attributed the rise in food inflation, year-on-year, to increases in prices of Semovita, yam flour (prepacked), wheat flour (prepacked), bread and cereals class, yam, irish potatoes, water yam, potatoes, yam and other tubers class), groundnut oil, palm oil (oil and fats class) and milo, Bournvita, Ovaltine, among others.Month-on-month drop in food prices was also attributed to the decline in the rate of increase in the average prices of tin milk, baby powdered milk, mudfish fish, fresh fish, snail, date palm fruit, watermelon, garri, akpu (under bread and cereal), exercise books, textbooks, turkey meat, and minced pork, among others.However, the rise in the core index, year-on-year, was attributed to highest increases in prices of rents (actual and imputed rentals for housing class), bus journey intercity, journey by motorcycle, etc. (under passenger transport by road class), and accommodation service, laboratory service, x-ray photography, consultation fee of a medical doctor, among others.The statistical agency pointed out that average annual rate of food inflation for the 12 months ending June 2024 over the previous 12-month average was 36.36 per cent, indicating an 11.90 per cent increase, from 24.46 per cent average annual rate of change recorded in July 2023.Year-on-year, urban inflation increased to 35.77 per cent, compared to the 25.83 per cent in July 2023. Month-on-month, the index was 2.46 per cent in July, almost from the preceding month.On the other hand, rural inflation stood at 31.26 per cent, year-on-year, compared to the 22.49 per cent in July 2023.Month-on-month, rural inflation dropped to 2.10 per cent, compared to 2.17 per cent in June.At state level, general inflation year-on-year was highest in Bauchi (46.04 per cent), followed by Jigawa (40.77 per cent), and Kebbi (37.47 per cent), while Benue (27.28 per cent), Delta (28.06 per cent) and Borno (28.33 per cent) recorded the slowest rise. Month-on-month, however, highest price increases were recorded in Abuja (3.91 per cent), Borno (3.84 per cent), Enugu (3.76 per cent), while Taraba (0.17 per cent), Kwara (0.62 per cent) and Ondo (0.91 per cent) recorded the slowest rise.Year-on-year, food inflation was highest in Sokoto (46.26 per cent), Jigawa (46.05 per cent), Enugu (44.06 per cent) while Adamawa (33.48 per cent), Bauchi (35.10 per cent) and Benue (36.41 per cent), recorded the slowest rise.Month-on-month, however, food inflation was highest in Borno (5.07 per cent), Sokoto (4.99 per cent), and Enugu (4.17 per cent), while Kwara (0.51 per cent), Taraba (0.56 per cent) and Ondo (0.68 per cent) recorded the slowest rise.
