According to data from the Central Bank of Nigeria’s quarterly statistics bulletin, the apex bank released $547.7m (N823.19bn at the official exchange rate of N1, 503.3/$1, as of June 30, 2024) to Nigerians for the importation of food items in the second quarter of 2024.
The amount is a reduction of $142.48m or 20.6 per cent from $689.88m recorded in the first three months of 2024 and N80.76bn or 8.93 per cent from N903.95bn recorded in Q1 when converted to naira.
This implies that the CBN released a total of N1.73trn for food items importation in six months.
An analysis of the reports at the weekend showed that Nigerians spent $164.43m in January, $303.91m in February, and $221.54m in March.
The apex bank also allocated $153.27m in April, $197.21m in May, and $197.22m in June.
This came as it was established that the Federal Government’s plan to reduce the price of food commodities through the implementation of zero duty on selected basic food items is increasingly becoming difficult to achieve.
This challenge is underscored by the alarming increase in the average price of imported food items, which rose to 878.3 price point index in September 2024, reflecting broader economic pressures.
On July 8, 2024, the Federal Government announced a 150-day duty-free import window for food commodities to ensure a reduction in food inflation in Nigeria.
The food commodities include maize, husked brown rice, wheat, and cowpeas.
It said the programme was meant to help cushion the effects of various factors contributing to food scarcity and price hikes in the country.
The idea was to remove or significantly reduce import duties and value-added tax to encourage an inflow of food imports and drive down consumer prices.
“The apex bank also allocated $153.27m in April, $197.21m in May, and $197.22m in June.”
But three months after the government announced the plans, the scheme has failed to take off, majorly due to government bureaucratic process and the failure of the Federal Ministry of Finance to publish a list of importers qualified to participate in the process as required by the guidelines earlier issued by the customs in August.
At a press briefing early this month, the Minister of Finance, Wale Edun, said the government had ordered maize and wheat imports to stabilise the food market.
While the government is yet to begin implementation of the policy, the price of imported food has continued to increase.
According to the National Bureau of Statistics monthly inflation report, the new figure indicated a rise of 30.6 price index or 3.61 per cent from 847.7 in August 2024.
Further analysis showed that the average price of imported food has surged by 72.3 percentage points or 8.97 per cent from the 806.0 average price index in July 2024 when the policy was announced and 878.3 in September.
On a year-to-date, this increase is a surge of 185.7 price index points or 26.81 growth from 692.6 in January 2024, indicating more resilience on foreign food products amidst food supply shortages in the country.
A month-by-month analysis showed that in January, Nigeria recorded an imported inflation rate of 26.29 per cent. This increased to 29.81 per cent in February, marking a notable jump of 3.52 per cent in the inflation rate from January.
The trend continued in March, with the imported food inflation rate climbing to 32.89 per cent, an increase of 3.08 per cent from February.
In April, the inflation rate further increased to 34.01 per cent, growing by 1.12 per cent from March, showing a slight deceleration in the rate of increase.
May recorded an imported food inflation rate of 34.83 per cent, indicating a continued upward trend. The increase in the inflation rate is 0.82 percent from April.
The figure was 806.0 in June, 826.2 in July, 847.7 in August, and 878.3 in September.
FG plans 5% tax on telecoms services, others
In a related development, the Federal Government has proposed a five per cent excise duty on telecommunications services, gaming, and betting activities as part of a new bill to overhaul Nigeria’s tax framework.
The bill, titled, “A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions, and Instruments, and Related Matters,” was dated October 4, 2024, and obtained from the National Assembly.
An analysis of the proposed legislation on Friday showed that it seeks to introduce excise duties on services such as telecoms, gaming, gambling, lotteries, and betting provided in Nigeria.
A section of the bill read, “The amount of an excisable transaction is the amount chargeable for the service by the service provider, both in money or money’s worth.
“Services, including telecommunications, gaming, gambling, betting, and lotteries however described, provided in Nigeria shall be charged with duties of excise at the rates specified under the Tenth Schedule to this Act in a manner as may be prescribed by the Service.”
A breakdown of the excise duty structure in the bill indicates that telecoms services, including postpaid and prepaid services regulated by the Nigerian Communications Commission, will attract a five per cent duty.
The same rate will apply to gaming, gambling, betting, and lottery services.
The bill also introduces guidelines on currency transactions, specifying that any difference between the prevailing Central Bank of Nigeria exchange rate and the actual transaction rate will be subject to excise duty.
The new tax regime forms part of the government’s strategy to boost non-oil revenue amidst fiscal pressures.
With rapid growth in the telecoms and betting sectors, authorities are looking to widen the revenue base.
The bill also aims to ensure that currency exchanges align with official CBN rates, with any excess payable as excise duty under a self-assessment model.
