Breaking News
Translate

Wavering Our Economy Away

THE 2011 budget ran at a deficit, but that did not stop government from granting import waivers worth more than N150 billion to 10 companies for them to import rice and palm oil. Over 100 c0mpanies participated in the importation of the tw0 commodities.

Government has not denied a media report that one of the companies got 164 waivers in nine months. Though the company registered its nature of business as “bookshops and stationery stores”, it got waivers to import refined palm oil.

The frequency of the waivers – June 1, N233 million, N233 million, N21 million and N67.4 million is remarkable. On June 10, the same company got approvals of N337 million, N136 million, N114 million, N141 million and N110 million. By June 14, got four other import approvals valued at N1.3 billion and on July 27, another N1.2 billion.

Another company, got rice import waiver approvals 34 times between February and July. In July, the company had waivers to import rice worth N1.45 billion naira, N46 million, N104.8 million and N92.1 million at different times. In July alone, the same company got duty waivers worth N469 million.

Rice import duty waivers, 36 times in 10 months, to a third company, cost government about N5 billion in taxes.

Duty serves the dual purpose of generating revenue for government and protecting domestic industries from foreign competitors which have more comparative advantages over Nigerian firms. An indiscriminate waiver policy discourages investments and leads to job losses in existing firms.

Waivers are discriminatory even against domestic manufacturers. Only a few companies get the waivers, placing them at advantage over others in terms of production costs. Farmers and manufacturers feel the impact of waivers most, especially as government has been encouraging them to invest in rice and palm oil productions, the same commodities on which it is issuing waivers.

The President, under the provisions of Sections 11 and 12 of the Customs, Excise Tariff, etc (Consolidation) Act 1995 can grant waivers, which could be used strategically to stimulate growth of domestic production. The unplanned award of waivers has the adverse effect of distorting the economic projects, stifling domestic production, inducing job losses and loss of revenue to government.

How the waivers are given is unclear. The Customs Act (1995) expects the President to exercise his powers on the recommendation of the Tariff Revenue Board based in the office of the Minister of Finance.

If such co-ordination existed, the Nigeria Custom Service would have had the opportunity to make its own case against waivers which affect its abilities to meet the annual budgetary targets government sets for it.

Rice and palm oil importation has at different times been banned or heavy duties imposed on them. Government talks of policies to enhance domestic production of the commodities. The President emphasised these in his 2012 budget speech.

“Our objective is to ensure food security whilst also promoting exports in agriculture value chains where we have a comparative advantage. We intend to process and add value to different crops such as rice, cassava, sorghum, oil palm, cocoa, cotton. We will further look at supportive fiscal policies for the rice and wheat sectors to stimulate domestic production,” the President said.

One of the ways of measuring the sincerity of government in 2012 is how it implements measures for the growth of the economy. Waivers, in the volumes of 2011, would definitely be contrary to fiscal policies that could stimulate growth of agriculture and manufacturing.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.