Market News

President Bola Tinubu has signed an executive order to suspend import duties and value-added tax on essential medical supplies imported into the country.

This is aimed at easing the high cost of locally producing pharmaceuticals, diagnostics, and medical devices such as needles and syringes, and biological among others.

Muhammad Ali Pate, minister of Health and Social Welfare announced the development on Friday, saying the Minister of Justice and Attorney General of the Federation is expected to take necessary action towards codifying the new order.

“The order is pivotal to the success of the Initiative for Unlocking the Health Care Value Chain which was approved in October 2023 by the President,” Pate stated.

“The order introduces zero tariffs, excise duties and VAT on specified machinery, equipment and raw materials, aiming to reduce production costs and enhance our local manufacturers’ competitiveness.”

According to the minister, specified items include active pharmaceutical ingredients (APIs), excipients, and other essential raw materials required for manufacturing of crucial health products like drugs, syringes and needles, long-lasting insecticidal nets and rapid diagnostic kits, among others.

The order also provides for establishing market shaping mechanisms such as framework contracts and volume guarantees, to encourage local manufacturers, the minister noted.

In addition, Pate stated that the order mandates collaboration between the ministers of Health, Finance and Industry, Trade and Investment to develop a harmonized implementation framework, expediting regulatory approvals and reducing bottlenecks.

Also agencies including the Nigeria Customs Service, National Agency for Food and Drug Administration and Control, Standards Organisation of Nigeria, Federal Inland Revenue Service will be tasked to ensure swift implementation, with special waivers and exemptions effective for two years.

“The implication of this order is pivot towards market-based incentives to encourage medical industrialization, reducing costs of medical products through import substitution over time, creating and retaining economic value and enabling job creation in the healthcare value chain,” Pate said.

Challenge

BusinessDay had reported that healthcare providers, pharmaceutical manufacturers, and drug distribution businesses face about 5 to 25 percent customs levy on imports of essential medical commodities, including raw materials for production.

They also grapple with product registration charges that do not give recourse to the reality that patients pay the price.

On paper, medical and pharmaceutical products are exempted from the standard value-added tax of 7.5 percent, alongside machinery for use in export processing zones and certain basic food items.

But despite this, healthcare businesses are reeling.