President Bola Tinubu has signed an executive order suspending import duties and VAT on essential medical supplies. This measure aims to reduce the high costs of producing pharmaceuticals, diagnostics, and medical devices domestically.
Health and Social Welfare Minister Muhammad Ali Pate announced the order, highlighting its significance for the Initiative for Unlocking the Health Care Value Chain, approved by Tinubu in October 2023. The order eliminates tariffs, excise duties, and VAT on specific machinery, equipment, and raw materials to lower production costs and boost local manufacturers’ competitiveness.
Key items benefiting from this order include active pharmaceutical ingredients (APIs), excipients, and other raw materials crucial for producing drugs, syringes, needles, insecticidal nets, and diagnostic kits. It also introduces market-shaping mechanisms like framework contracts and volume guarantees to support local manufacturers.
The order calls for collaboration between the ministries of Health, Finance, and Industry to create a harmonized implementation framework, expedite regulatory approvals, and minimize bottlenecks. Agencies such as the Nigeria Customs Service, NAFDAC, SON, and FIRS will ensure swift implementation, with waivers and exemptions in place for two years.
Pate emphasized that this order aims to incentivize medical industrialization, reduce costs through import substitution, and create economic value and jobs within the healthcare sector.
Reports indicate that healthcare providers and pharmaceutical manufacturers face significant customs levies and registration charges, which ultimately increase costs for patients. Despite exemptions, many medical products still attract high import duties under the ECOWAS Common External Tariff (CET) and Fiscal Policy Measures.
For instance, medical imaging devices and respiratory support systems attract varying import duties, while syringes and surgical equipment face substantial taxes. Pharmaceutical packaging materials like gelatin capsules also incur high import duties.
Industry experts, like Samuel Okwuada of Remedial Health, argue that removing these levies will directly reduce medicine prices, benefiting struggling Nigerians. Given the heavy reliance on imports from India and China, maintaining high charges is seen as counterproductive.
Okey Akpa of PMG-MAN has previously advocated for zero duties on specialized equipment to enhance local production capacity.
