Prices fall as federal government suspends import duties and VAT on medical supplies, list of affected items

• President Bola Tinubu has signed an executive order suspending import duties and VAT on medical supplies
• The aim of this measure is to reduce the costs of locally manufactured medical supplies such as needles and syringes.
• This comes amid the announcement of several pharmaceutical companies to cease operations in Nigeria.

Pascal Oparada of Legit.ng has been covering technology, energy, stocks, investing and the economy for over a decade.

President Bola Tinubu has signed an executive order suspending import duties and value added tax on essential medical goods imported into Nigeria.

The aim of this measure is to reduce the cost of locally manufactured medicines, diagnostics and medical equipment such as needles and syringes.

FG names affected medical supplies

The Minister of Health and Social Services, Muhammad Ali Pate, announced the development on Friday, June 28, 2024, stating that the Minister of Justice and the Attorney General of the Federation would take the necessary steps to codify the new order.

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The minister said:

“The order is critical to the success of the Healthcare Value Chain Opening Initiative, approved by the President in October 2023.”

“The regulation will eliminate customs duties, excise duties and VAT on certain machinery, equipment and raw materials. The aim is to reduce production costs and improve the competitiveness of our local manufacturers.”

According to the minister, the selected items also include active pharmaceutical ingredients (APIs) and other essential raw materials needed to manufacture essential health products such as pharmaceuticals, syringes, medicines and long-lasting insecticidal diagnostic kits.

The new regulation aims to reduce prices

The regulation reportedly provides for market-shaping mechanisms such as framework agreements and quantity guarantees to promote local producers.

In addition, the minister pointed out that the order requires cooperation between the ministers of health, finance, industry, trade and investment to develop an implementation framework, quickly obtain regulatory approvals and eliminate bottlenecks.

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The new regulation also requires the Nigeria Customs Service (NCS), the National Agency for Food and Drug Administration and Control (NAFDAC), the Nigerian Standards Organisation (SON) and the Nigerian Federal Revenue Service (FIRS) to expedite the implementation of the new regulation and the exemptions for two years.

Pharmaceutical companies cease operations in Nigeria

According to reports, medical supplies such as needles, syringes and other products are subject to an import adjustment tax of 65 percent, while surgical needles and dental instruments are subject to an import duty of five percent.

In the last twelve months, many pharmaceutical companies in Nigeria have closed down.

GSK announced its withdrawal from Nigeria in 2023 after 52 years, while a syringe manufacturer ceased operations.

The companies cited a difficult operating environment and foreign exchange restrictions as reasons for their actions.

CBN lowers customs exchange rates for cargo handling

Legit.ng had previously reported that the Central Bank of Nigeria (CBN) has adjusted the Nigerian Customs exchange rates for cargo clearance at Nigerian ports.

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Checks on the Customs trade portal show that the Central Bank reduced the price from 1,505 naira to 1,470,191 naira per dollar.

This development means that from the time of the change, importers will have to pay less for the handling of their cargo at Nigerian ports.

Source: Legit.ng