Zero grains import waivers and stringent terms and conditions

News Dissect Editorial

When, on July 10, 2024, President Bola Tinubu announced the suspension of duties and taxes on some critical food items as a stop gap measure to address the acute food shortage and the consequent hunger and starvation in the land, many may have thought that the offer was generous and open-handed.  

Such people may have expected, naturally, that rice merchants, importers and traders who have the means would be allowed to bring in these essential food items in order to confront the rampaging hunger, suffering and anger across the country. In other words, considering the dire situation and the urgency, such Nigerians had expected that importation of these food items would be swift and devoid of encumbrances and bureaucratic restrictions.

In fact, many thought that the duty-free grains import policy was such that everyone that has the resources to import the items had been empowered to do so, in order to crash the prices of the affected commodities as soon as possible.

But that is not the case as the terms and condition released by government recently through the Nigeria Customs Service have shown. Looking at the terms and conditions, it will be safe to conclude Nigerians really do not have any reason for cheers or any reason to hope that prices of food items would hit rock bottom soonest as the Minister of Agriculture said when the announcement was made.

According to the eligibility criteria released by the Nigeria Customs Service, to qualify to participate in the importation, companies must be incorporated in Nigeria and have been operational for at least five years, consistently filing annual returns, and financial statements, and paying all taxes and statutory payroll obligations during this period.

For those importing husked brown rice, grain sorghum, or millet, additional requirements include owning a milling plant with a capacity of at least 100 tons per day, which must have been operational for a minimum of four years, along with sufficient farmland for cultivation.

Similarly, companies importing maize, wheat, or beans must be agricultural enterprises with adequate farmlands or feed mills/agro-processing facilities that maintain an out-grower network for cultivation.

In addition, the Federal Ministry of Finance will periodically supply the Nigeria Customs Service (NCS) with a list of approved importers and their quotas to facilitate the smooth importation of these basic food items within the framework of this policy.

The policy also mandates that at least 75% of the imported items be sold through recognized commodity exchanges, with all transactions and storage thoroughly documented.

Companies are also required to maintain comprehensive records of all related activities, which the government may request for compliance verification.

Failure to meet the obligations under the import authorization will result in the company losing all waivers and being required to pay the applicable VAT, levies, and import duties.

Stringent conditions, indeed! How many companies are able to meet these conditions? How many rice importers have farmlands and milling facilities? How many rice millers boast of 100 tonnes production capacity?

It is clear that with these stringent conditions, small, medium and modular rice millers who have been the ones feeding the nation with about 80 per cent of the rice consumed by Nigerians have been side-lined.

Because the government policy was made, obviously, without the inputs of the relevant stakeholders, government did not know that bringing rice into Nigeria does not involve only importing rice from China, India, Thailand or Vietnam. There are rice millers who can import paddy from West African countries and make rice available to Nigerians. These millers trade within the West African sub-region.

Beyond that, reports indicate that some of these smaller millers are organised in clusters, and can put money together and import directly. If such clusters exist, is it not expedient to encourage them to import directly from Asia or anywhere, instead of looking for individual millers with 100 tonnes capacity?

If the government is really concerned with the hunger in the land, and is serious about flooding the markets with the scarce food items within the five months window, all those who are able should be allowed to participate in the zero duty importation. There should be no form of discrimination.

Notably, even though duties and taxes would not be paid under the policy, the commodities would still be purchased with foreign currency. This is where the high exchange rates come into play. Naira has been so bashed and trampled by the dollar and other foreign currencies, including the CFA Franc. Consequently, to make the imported food items affordable to the masses or to bring the prices of the commodities to, at least, half of their current prices, government needs to take a definite measure.

It will not to be too much sacrifice to fix a particular exchange rate for the purpose of implementing the policy for five months. Doing this will demonstrate government seriousness, and guarantee the food items flooding the market as envisaged, as more people will be able to participate in the process.

More than one month has gone out of the five-month window, since it took effect from July 15. Up to now the Ministry of Finance is yet to fine tune the policy, and is yet to furnish the Nigeria Customs Service (NCS) with a comprehensive list of firms selected for participation in the intervention programme. Will there be an extension after the 31st December deadline?

Government should, therefore, be less restrictive and allow all those who can take advantage of the zero duty/tax policy to flood the markets with the essential food items in order to stem the anger in the land. Where it insists on implementing the terms and conditions as earlier conveyed to Customs, then the offer becomes, another gimmick to pull the wool over citizens’ eyes or a ploy to allow anger and tempers to subside –or one of the veritable schemes to keep the people hoping.