Levies in the time of inflation

Nigeria’s food crisis is gunpowder awaiting a spark to create national upheaval, threatening sovereignty. Prices are at an all time high, food inflation nicking 40.5 percent. The previous administration, misled by arsinine economic ideologies, turned Nigeria into a closed system in a bid to attain self-sustenance.

Touting acronyms such as BRICS, MINTs, it hoped to perform economic miracles without the hard work of purging itself of systemic greed. Such misguided thinking would culminate in artificial Rice Pyramids in the final years of the previous administration, and hollow projects, such as Nigeria Air. No surprise then, the galloping inflation that has crippled all sectors and undone the currency.

Week after week, the naira gasps under the heels of inept application of good policies. Foreign exchange rates so unstable traders peg a high margin in order to predict future market prices. Speculation is the order of the day in the Nigerian market, which drives away foreign investments.

Thankfully, the current Federal Government is planning a six-month suspension of import duties on staple food items, drugs, and other essential items as a measure to curb inflation.

 The Inflation Reduction and Price Stability Order, as outlined in the document, 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 containing the Order read.

The President is also likely to suspend value-added tax (VAT) 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.

Recall that the federal government in its Accelerated Stabilisation and Advancement Plan (ASAP) report submitted by Finance Minister, Wale Edun, 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; Importation of paddy rice by millers; Import duty exchange rate peg.

Among the hardest-hit commodities is rice, a dietary staple. In the past year alone, rice prices have skyrocketed by 169 percent, 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. The repercussions of this crisis extend far beyond economic concerns, impacting health, education, and overall societal well-being. Nigeria’s afflictions though abundant are not insurmountable.

The lifting of heavy duties on imports will surely alleviate the inflation yoke upon the economy, and we look forward with renewed hope at this possibility.