THE Ministry of Health and Social Welfare has announced the completion of an executive order to eliminate value-added tax (VAT) on pharmaceutical products and medical devices.
This policy, according to a statement by the ministry, on Wednesday, October 9, is now set for implementation, is expected to reduce the cost of essential drugs and medical supplies in a country struggling with skyrocketing medication prices.
The finalised executive order harmonized implementation framework is said to have been cleared for gazetting, allowing the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service to implement zero VAT and excise duties on pharmaceutical products.
This policy is also expected to encourage local production, lower drug costs, and ultimately make quality healthcare more accessible to millions of citizens.
“With the implementation of this executive order, we anticipate a notable reduction in the prices of essential pharmaceutical products and medical consumables. This development aligns with the ministry’s unwavering commitment to reducing both the physical and financial pain faced by millions of Nigerians who depend on these critical health supplies.
“Furthermore, the gazetting of the harmonized implementation framework represents the realisation of the third pillar of the ministry’s four-point agenda, which focuses on unlocking the healthcare value chain. By creating an environment that supports local manufacturers, we are fostering a healthier, more self-reliant nation, and ensuring that quality healthcare becomes more accessible and affordable for all,” the statement added.
This announcement comes against the backdrop of rising drug prices in Nigeria, a situation exacerbated by inflation, currency devaluation, and supply chain disruptions.
Nigeria has witnessed a surge in the cost of essential medications, with some life-saving drugs becoming unaffordable for low-income families.
On Wednesday, June 5, Bloomberg reported that the federal government was considering a six-month suspension of import duties on staple food items, drugs, and other essential items to curb inflation.
According to a presidential document, the government was also considering waiving levies on fertilisers, poultry feed, flour, and grains.
The basic and semi-processed staple foods and other items highlighted in the document included raw materials and other direct inputs used for manufacturing; inputs for agriculture production including fertilisers, seedlings, and chemicals; pharmaceutical products; and poultry feeds, flour, and grains.
The document, ‘Inflation Reduction and Price Stability Order’ sought to mandate the Ministry of Finance and the Central Bank of Nigeria (CBN) to devise a plan for offering low-interest loans to the agriculture, pharmaceutical, and manufacturing sectors.
It further stated that the government would likely suspend value-added tax (VAT) on automotive gas oil.
Nigeria, largely an import-dependent economy with much of the finished products imported from overseas, imposes different import tariffs amid surging inflation figures and naira devaluation.
Following the reported move, The ICIR analysis shows that the prices of the proposed items could drop by an average of 18 per cent, a gesture that could relieve Nigerians from the hardship they faced.
Findings from the NCS website show that tariffs on imported goods range from five per cent to 35 per cent, categorised into five, 10, 20, 30, and 35 per cent rates for different items, and a 7.5 per cent VAT rate on some of the items.
Meanwhile, the Health Ministry noted that the gazetting of the harmonized implementation framework was a “huge win for the health sector,” emphasising the government’s dedication to improving the accessibility and affordability of healthcare in Nigeria.
The ministry also pledged to distribute copies of the gazetted framework to relevant agencies like FIRS and Customs to expedite its implementation process.
Usman Mustapha is a solution journalist with International Centre for Investigative Reporting. You can easily reach him via: umustapha@icirnigeria.com. He tweets @UsmanMustapha_M