Food importers taking advantage of the Federal Government’s duty waiver must sell not less than 75 per cent of the items at the approved markets.

They are also precluded from exporting the items they import under the tariff’s waiver regime, which is a short-term measure to boost food availability and affordability.

High prices of food items have fueled inflation and made life unbearable for a large number of Nigerians.

Food inflation, according to the National Bureau of Statistics (NBS), is more than 40 per cent – the major enabler of the 34.19 per cent headline inflation.

Those who instigated protests against the government early in the month anchored it on what they called “hunger in the land”.

As part of measures by the Federal Government to alleviate the food crisis, the waiver of Customs duty and other tariffs on some categories of food items was introduced.

The policy, which took off on July 15, will end on December 31. Its objective is to reduce the cost of food.

The Nigeria Customs Service (NCS) has estimated that the six-month tariff waiver would indirectly transfer about N188.4 billion to Nigerians as food subsidy, being the value of the revenues to be waived.

According to the NCS, the basic food items eligible for the zero per cent duty rate include husked brown rice, with a previous rate of 30 per cent; grain sorghum, 5.0 per cent; millet, 5.0 per cent; maize, 5.0 per cent; wheat, 20 per cent and beans, 20 per cent.

The implementation of the zero per cent duty rate (0 per cent) and Value Added Tax (VAT) exemption on selected basic food items is expected to contribute to the decline in inflation over the next months.

A review of the guidelines released yesterday by the NCS indicates a mix of innovative finance that directly transfers values to the average consumer but simultaneously rewards commitments to national productivity and the development of the agricultural value chain.

Under the guidelines, at least 75 per cent of imported items must be sold through recognised commodities exchanges, with all transactions and storage recorded.

The importing companies must keep comprehensive records of all related activities, which the government can request for compliance verification.

Commodities exchanges are simply formal, specialised markets where agricultural products and other commodities are traded. Commodities exchanges enable the development of the sectoral value chain through standardised measures and procedures.

Leading commodities exchanges in Nigeria include Lagos Commodities and Futures Exchange (LCFE), Nigeria Commodities Exchange (NCX) and AFEX Commodities Exchange.

Also, to participate in the zero-duty importation of basic food items, a company must be incorporated in Nigeria and have been operational for at least five years.

The company must have filed annual returns and financial statements and paid taxes and statutory payroll obligations for the past five years.

Also, companies importing husked brown rice, grain sorghum, or millet need to own a milling plant with a capacity of at least 100 tons per day operated for at least four years, and have enough farmland for cultivation.

Companies importing maize, wheat, or beans must be agricultural companies with sufficient farmland or feed mills and agro-processing companies with an out-grower network for cultivation.

The implementation guidelines also provide evaluation mechanisms and sanctions for defaulters.

The Federal Ministry of Finance will periodically provide the NCS with a list of importers and their approved quotas to facilitate the importation of these basic food items within the policy framework.

If a company fails to meet its obligations under the import authorisation, it will lose all waivers and must pay the applicable VAT, levies, and import duties.

The penalty also applies if the company exports the imported items in their original or processed form outside Nigeria.

Comptroller–General of NCS, Adewale Adeniyi, said: “The initiative is part of the government’s broader efforts to address food security challenges and ensure that basic foodstuffs are accessible to all Nigerians.

“However, it is important to emphasise that while this temporary measure is intended to address current hardships, it does not undermine the long-term strategies put in place to safeguard local farmers and protect manufacturers.”

The Association of Master Bakers and Caterers of Nigeria (AMBCN), Lagos Chapter, expressed optimism that the tariff suspension would help in reducing the prices of bread and other items.

Its president, Chief Ayoola Mathew, commended the government’s initiative, noting that the continuous increase in the price of flour has not only dealt a big blow to the baking industry but has made life unbearable for Nigerians.

While lamenting that the prices of sugar, yeast, butter and other ingredients are also increasing, he said it has led to the closure of many bakeries and high unemployment rate.

“This constant increase in the price of flour by millers has made it impossible for bakeries to operate and function smoothly which has also led to the shutdown of many bakeries and their staff being laid off,” Mathew said.