Importers Hesitant to Embrace Policy Amid Concerns Over Clarity and Government Commitment
Despite the introduction of a 150-day duty-free import window for certain food items, aimed at reducing food prices, insiders reveal that importers are yet to fully embrace the policy. Concerns are rising among stakeholders over the lack of foreign exchange (FX) support and other incentives, which they believe are crucial for the policy’s success.
More than a month after the policy’s launch, sources within the Ministry of Finance and the Nigeria Customs Service (NCS) have reported that there is little evidence of its implementation. Many farmers and importers, who are the policy’s primary targets, remain skeptical, with some outrightly boycotting the initiative. The primary concern among these stakeholders is the ability to source FX for imports. According to insiders, without FX support, the promise of duty-free imports alone is insufficient to achieve the desired reduction in food prices.
Additionally, farmers have voiced concerns about the need for more incentives to boost local production, which they view as a more strategic approach than relying on imports. The eligibility criteria for the duty-free window restrict participation to established businesses with a proven track record of good governance and tax compliance for at least five years. These businesses must also have substantial farmland, feed mills, or agro-processing facilities with an out-grower network.
Dr. Muda Yusuf, a private sector advocate and former Director General of the Lagos Chamber of Commerce and Industry (LCCI), criticized the policy for excluding small and medium-sized enterprises (SMEs). He argued that these restrictive conditions undermine the effectiveness of the program. According to Yusuf, a significant portion of the imported food items—75%—is expected to be sold through recognized commodity exchanges, a stipulation that has further increased uncertainty surrounding the program.
There are also fears that the absence of clear guidelines and concrete implementation strategies could jeopardize the policy’s success. Despite the release of new guidelines by the NCS on August 14, 2024, outlining eligibility for the zero-duty waiver, which ranges from 5% for grain sorghum, millet, and maize to 30% for husked brown rice, many stakeholders are still unclear about how to participate effectively. The guidelines also stipulate that qualifying companies must have a minimum milling capacity of 100 tonnes per day and have been operational for at least four years.
Yusuf noted that while these measures aim to support companies involved in both farming and milling, the stringent criteria could exclude SMEs that have also contributed significantly to the industry. The Rice Millers Association of Nigeria has expressed similar concerns, indicating that many of its members may be unable to meet these requirements. Yusuf suggested that a review of the guidelines might be necessary to ensure broader industry participation, including SMEs.
Regarding FX support, Yusuf acknowledged that while the FX market is now more accessible, high exchange rates remain a significant challenge. He warned against introducing concessionary FX rates for importers, suggesting that this could lead to market distortions. Instead, he emphasized the importance of swift policy implementation to achieve the primary objective of reducing food inflation.
Stakeholders have also raised concerns about the lack of a concrete strategy for commodity exchange participation, a critical component of the policy. Some fear that the December closure date could pass without any substantial progress, prompting suggestions to extend the deadline by another six months. There are also worries that the NCS, which has shifted focus from trade facilitation to revenue mobilization, may either undermine the policy or remain indifferent to its administration.
Experts have highlighted the lack of infrastructure—such as reliable power supply, good roads, and security—as potential obstacles to distributing imported food effectively, which could undermine the policy’s objectives. Henry Adigun, an energy and development expert, pointed out that the challenge is not the concept of duty-free imports but the practical implications and readiness of the market to benefit from the policy.
A financial analyst, Abubakar Umar, called for an extension of the timeframe to allow stakeholders to fully utilize the opportunity and positively impact economic activity. However, he warned of the potential risks of over-reliance on imports, which could destabilize the government’s policy on food self-sufficiency. He advocated for an exit strategy to avoid market distortions and suggested stricter customs oversight and monitoring to prevent smuggling and abuse of the duty-free imports.
Meanwhile, Kabir Ibrahim, President of the Nigeria Agribusiness Group and the All Farmers Association of Nigeria (AFAN), noted that key players in the agricultural sector are already taking steps to benefit from the initiative. However, he emphasized the need for clearer guidelines and better infrastructure support to ensure successful implementation.
Economist Kelvin Emmanuel criticized the conflicting directives and the lack of effective regulation to prevent price gouging, which could undermine the policy’s goals. Industry stakeholders are urging the government to streamline the process and ensure that the policy benefits the intended recipients, thereby stabilizing food prices and providing relief to millions of Nigerians.
