Business
North’s opposition, red-tape frustrate FG’s food-import waiver policy
…as prices of food items continue to rise
The Federal Government’s zero import duty policy on essential staple foods appears to have hit the rocks as Nigerians continued to grapple with soaring prices of goods, Business Hallmark findings have revealed.
Checks revealed that rather than abate, food inflation has intensified, in some cases more than doubled, since the policy was announced by the government in July 2024.
The Federal Government, it would be recalled, had approved a 150-day duty-free window in July to aid the importation of husked brown rice, grain sorghum, millet, maize, wheat, and beans from abroad as part of measures to help bring down the high prices of food items.
The government set the policy’s official take off date as July 15, 2024, through December 31, 2024.
However, less than three weeks to its expiration, BH findings revealed that the policy has largely failed to meet its objectives as there is nothing on ground to show for it.
While there are no signs to suggest that the policy has actually taken off, prices of several food items covered by the tax waiver have continued to rise across the country.
According to the latest Consumer Price Index (CPI) released last month by the National Bureau of Statistics (NBS), Nigeria’s headline inflation rate rose to 33.88% in October 2024, up from 32.7% in September 2024.
The NBS attributed the rise in inflation to increased transportation costs and higher food prices.
A breakdown of the NBS report showed that on a month-on-month basis, food inflation rate rose to 2.94% in October, a 0.30% increase from the 2.64% recorded in September 2024.
Checks in commodities markets in Lagos show that a 50kg bag of rice, one of the items on the imports waiver list, currently goes for between N84,000 and N108,000, depending on the brand and quality.
Financial experts expect November’s inflation figures, which is yet to be announced by the statistics bureau to rise further. Though the Federal Government has kept quiet on the obvious shortcomings identified in the programme, BH findings indicated that the policy failed for several reasons.
One of the factors identified for stalling the tax waiver policy of food items is red-tapism. For instance, despite the fact that the Federal Government announced the policy as far back as May 2024, with the take off and expiration dates of July 15, 2024 and December 31, 2024, the Nigerian Customs Service (NCS) did not provide clarity on the details and framework for its implementation until in the middle of September.
When the details were eventually released by the NCS in September, many aspiring food importers were left frustrated by the stringent conditions required to qualify for the programme.
For instance, a company must be incorporated in Nigeria and have been operational for, at least, five years for it to be able to participate in the zero-duty importation of basic food items.
Also, the benefiting company must have filed annual returns and financial statements and paid taxes and statutory payroll obligations for the past five years.
Specifically, a firm applying to import grain sorghum, millet and husked brown rice must own a milling plant with a capacity of, at least, 100 tons per day. Apart from this condition, the company must have operated for, at least, four years and have enough farmland for cultivation.
On the other hand, companies importing maize, wheat, or beans must be agricultural based with sufficient farmland or feed mills/agro-processing companies with an out-grower network for cultivation.
Experts, who spoke on the stringent conditions, described it as too rigid and unrealistic. According to them, the policy tends to favour shylock farmers and millers in the food value chain fingered in the present price hikes.
A small farmer and food specialist based in Ibadan, Tope Olumilua, faulted the government’s tough requirements, saying it will only favour big companies with massive farms and milling companies in the habit of fixing prices.
“Apart from established farms like Olam and milling and food production companies with concrete out-grower deals with farmers like Dangote Group, Flour Mills of Nigeria (FMN), BUA Group and Honeywell Flour Mills Plc, how many companies can produce 100 tons of maize, beans, sorghum or rice a day in Nigeria of today? We are talking of 2,000 50kg bags a day and 60,000 bags a month.
“Rather than waste peoples precious time, they should just tell us that they are out to protest the interests of the big players and other local players who had invested massively in the agricultural value chain.
“They are the only ones that have the capacity to meet the demands. They have invested massively in out-grower deals with farmers to buy back their products.
“Most of the farmers in the country today have mortgaged their future yields to agro-allied companies, who had already paid for it. So, you expect then to undermine their own businesses? I don’t think they will ever do that. The status quo is in their favour and they will rather preserve it”, Olumilua stated.
Apart from the stringent conditions hindering the successful take off of the foods tax waiver policy, government’s slow pace in releasing beneficiaries names had technically stalled the policy.
Our correspondent reliably gathered that the overseeing body, the Ministry of Finance, had not released the list of importers qualified to participate in the food import programme to the Customs Service to enable it process their papers.
NCS’s spokesperson, Abdullahi Maiwada, had told BH back in October that the service was still expecting the list of benefiting firms from the ministry of finance.
“The moment the NCS issued the guidelines conveying the approval of the Federal Ministry of Finance, technically, the implementation started.
“But since the guidelines came from the Federal Ministry of Finance, they are also supposed to provide the list of the importers qualified to benefit from the import waiver.
“So, you need to ask the ministry if the list has been provided to the Customs as supposed”, Maiwada had explained.
Meanwhile, efforts to get the NCS and ministry of finance to speak on the matter proved abortive as their spokespersons were unreachable as of the time of going to press.
Speaking on the matter, a member, of the Association of Nigeria Licensed Customs Agents (ANLCA), Femi Kayode, put the blame on government, faulted Customs, insisting that there was yet to be a clear-cut and proper guideline for the implementation of the import free policy.
According to Kayode, who is also the Special Assistant to the Chairman of ANLCA, Murtala Muhammed International Airport Command Chapter, Prince Adewusi Bamigbala, there’s the possibility of internal sabotage and frustration within the government to undermine the implementation of the policy to protect some interests.
“From the circular available there are no clear-cut directives apart from the fact that some of the tariffs were mentioned.
“There are no proper guidelines for its implementation. The Customs must put it into proper perspective.
“There is the possibility of internal sabotage or frustration in getting the implementation right.
“Customs may be having internal challenges about the proper classification or coding of the tariff waiver into its portal”, he said.
Meanwhile, impeccable sources in government informed BH that opposition to the policy from some powerful forces in the North hell-bent on protecting the region’s economic mainstay, which is farming, is largely responsible for the slow start of the policy.
According to the sources, who preferred to hide their identities, northern traditional, religious and political leaders are opposed to throwing open the nation’s borders to imported food items, which they believe will harm their own agricultural industry by driving farmers away from the farms and accentuate poverty.
“The North is against the policy. In fact, they are jittery that the policy will lead to the crash of staple foods cultivated in the region, making them uncompetitive.
“They have made numerous overtures to top people in government, who seem to have sympathetic ears. The need to accommodate the interests of the region is one of the reasons government is moving at snail speed to implement the policy. As things stand, it is a win-win situation for the North as their interest are fully protected”, one of the sources disclosed.
Another source, who spoke on the matter told our correspondent that the present administration is not willing to alienate its strong support base in the North, hence the decision to foot-drag on the policy.
“I think the hopes of many low income Nigerians banking on the policy to crash food prices will not be realized soon as political considerations have crept in to thwart the noble initiative”, the source stated.
Though, representatives of northern farmers have remained tight-lipped on their position the policy, BH gathered that they are largely opposed to it, but chose to lobby the government to relax the policy rather than been confrontational.
However, the Rice Farmers Association of Nigeria (RIFAN), Lagos State chapter, called on the government to encourage farmers in the country rather than allow importation.
Chairman of RIFAN in Lagos State, Mr. Rapheal Hunsa, argued that the policy is not beneficial to farmers and that the federal government should encourage encouraged local farmers.
“The import duties exception the government has granted for rice imports will greatly affect local rice production.
“This will license and give opportunities to businessmen to import their rice free-of-charge. This development is not encouraging to local rice farmers at all, it is not beneficial to us. This means the government is encouraging more rice imports at the detriment of our local rice.
“What we are asking the government to do, is to empower local rice farmers, so that the country will move forward.
The countries we are importing from, if their government did not empower their farmers for increased rice production, they will not produce enough to export.
“So, let our government support rice farmers too, and let this support get to the right people, so it will not be a scam. We believe some group of persons have confused and advised this government wrongly on this policy.
“Rice farmers are not happy about this policy, we are disadvantaged by it. We were not considered in this policy formulation”, the Lagos RIFAN chairman lamented.