From Juliana Taiwo-Obalonye, Abuja
The Federal Government on Wednesday explained that its decision to reduce import duties on commodities affecting food and transportation, is targeted at reducing inflation.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, gave this explanation while responding to questions at the week’s virtual Federal Executive Council (FEC) meeting, presided over by President Muhammadu Buhari at the State House in Abuja.
The Finance Bill 2021, which was passed on to the National Assembly by President Buhari, is designed to cut some import duties on some commodities, including vehicles.
Explaining the government’s plan to beat inflation, Ahmed said the two main target of the plan are the food and transportation sectors, saying that government hoped to make transportation affordable, thereby reducing the harsh conditions that had made food in inflation factor.
“Inflation is high at 16.7% and we’ve seen inflation inching up gradually over the last couple of months. So the question that was raised on the issue of reduction of import duties, the simple response is it’s not effective.
“So when a bill is passed, first of all, we’ll have to wait for the bill to be conveyed to the President and then it’s conveyed to us and then we’ll convey it to the various agencies that have different roles to play and then they review the bill to roll out guidelines and directives for implementation. The Nigerian Customs Service has done that guidelines and have conveyed to all of the posts for implementation.
“But the point between that particular aspect and inflation is that the reason why we advocated and got approval for reduction of those import duty waivers is precisely because of inflation. When you look at the components that constitute inflation in our country, the largest contributor is food inflation and food inflation also, if you decouple it, the largest contributor to food inflation is the cost of transport.
“We were now look at how do we reduce the cost of transport because we can’t give every Nigerian money in their pockets to pay for transport. We figured that one of the good ways to do it is to reduce the acquisition of mass transit vehicles to reduce the acquisition cost of vehicles and tractors that are used for productive purposes like agriculture.
“So the reason why we reduce those duties is to reduce the cost of transportation. So once this implementation takes full effect, we’re hoping that we’ll be able to see more tractors coming into the country, more mass transit buses coming to the country, reducing the cost of transportation as a result, and also having an impact on food prices”, she explained.
Speaking on the issue of rice smuggling, which had increased since the borders were reopened last year, the Minister said efforts are being made to monitor and control the situation, noting that rice smuggling is capable of obliterating the progress made in rice production during the period of border closure.
“We are all concerned as an administration about the smuggling of rice into the Nigerian markets and if this is allowed to continue, it will definitely distort the local production.
“Mr. President, in authorising the opening of the borders, also directed an implementation committee that would be the same border drill committee that will be the opening of the borders and monitoring the implementation of movement of goods at the borders.
“So this same group has also been directed to ensure that this smuggling stops because it has the potential to distort the local production of rice. We are expecting that the security agencies, the Nigerian Customs and Immigration and some of the other stakeholders that form part of our border drill committee will heighten the level of activities in their work to be able to curtail the smuggling activities”, she said.