Setbacks Loom as Nigeria’s Zero Import Duty Policy Fails to Ease Food Inflation
Hopes for lower food prices in Nigeria may be dimming as the government’s zero import duty policy on essential staples faces significant setbacks. The initiative, aimed at reducing food inflation and alleviating pressure on vulnerable citizens, has hit a snag due to lack of coordination, unclear directives, and deeper agronomic and infrastructural challenges.
President Bola Tinubu introduced the 150-day duty-free import window for food commodities to combat rising food inflation. Since he took office in May 2023, inflation has climbed from 22.4% to 33.95% by May 2024, peaking at 34.19% in June before a slight dip in the following months. Despite these fluctuations, inflation remains a persistent concern, reaching 32.7% by September 2024, according to the National Bureau of Statistics.
The duty-free policy, however, has struggled to get off the ground. An initial two-month delay occurred as the Ministry of Finance failed to issue the necessary directives, and role conflicts between implementing agencies further complicated matters. The Nigeria Customs Service (NCS) revealed that the federal government would lose N188.4 billion in revenue over the five-month window, which has caused discomfort within both the Finance Ministry and the Federal Inland Revenue Service.
Two and a half months after these issues emerged, the policy is still entangled in bureaucracy, with key stakeholders voicing their frustrations. Lucky Amiwero, President of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), highlighted the confusion and lack of communication among government agencies responsible for implementing the zero-duty measure.
The delay has already led to significant consequences for businesses grappling with rising costs from energy, exchange rates, and oil prices. Many companies are at risk of closure, and import activities are stagnating, all of which point to the urgency for action.
Analysts at Afrinvest Research have questioned the policy’s effectiveness, noting that Nigeria's agricultural and infrastructural deficiencies could undermine its potential impact. They argue that the 150-day duty suspension may not be enough and that without addressing fundamental issues in the domestic agriculture sector, the policy may fall short.
Inflation and exchange rate fluctuations have also negated some of the intended benefits. Food inflation remains high, with a year-on-year increase of 25 basis points and month-on-month rise of 27 basis points, reflecting the burden of energy price hikes and transportation costs. Imported food inflation is also on the rise, surging to 39.5%. Furthermore, the naira has depreciated by over 5.5% in the official market and nearly 10% in the parallel market since the announcement, driving up the cost of food imports.
As the delays continue, it remains uncertain whether the zero-duty import policy will achieve its goals, or if it will be overwhelmed by Nigeria’s broader economic challenges. For many low-income Nigerians hoping for relief from soaring food prices, the road ahead looks increasingly uncertain.
