Nigeria plans to suspend import levies on food to ease inflation

Nigeria is considering suspending import duties on staple food, drugs and other essential items for six months to slow inflation in Africa’s most-populous nation. 

The government may also waive levies on fertilizers, poultry feed, flour and grains, according to a document seen by Bloomberg that has been sent to President Bola Tinubu for his consideration. As part of a plan to get its finances in order, the administration will also stop borrowing from the central bank through so-called ways and means advances. 

Tinubu, who completed a year in office on May 29, is under pressure to ease the cost of living in Nigeria after inflation accelerated to 33.7% in April, the fastest pace in 28 years. Previous attempts haven’t worked. Surging prices and a weakening naira — the world’s worst-performing currency this year after the Lebanese pound — have prompted the central bank to raise interest rates to a record.

A government spokesman declined to comment because the president hadn’t signed the document. 

The so-called Inflation Reduction and Price Stability Order will require the Ministry of Finance and the Central Bank of Nigeria to come up with a plan to provide low-interest loans to the agriculture, pharmaceutical and manufacturing sectors. 

“This productive deployment will ultimately improve outputs and reduce inflation,” according to the document. 

Measures taken by the government last year haven’t yielded results. In July, Nigeria declared a state of emergency to allow the government to take exceptional steps to improve food security. 

The same month, the government said it raised $500 million to transform food production. A few weeks later, Tinubu announced a 500 billion-naira ($335 million) package aimed at improving food supply, easing transportation costs and boosting manufacturing.

Nigeria, where at least 40% of more than 200 million people live in extreme poverty, is struggling to control price gains after Tinubu ordered the implementation of policies to allow the naira to trade more freely and remove fuel subsidies. A threefold increase in electricity tariffs, high food costs and a 39% depreciation in the naira this year are fanning inflation. 

The president is also likely to suspend value added tax 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.