Tinubu signs Executive Order removing tariffs, VAT on pharma imports

President Bola Ahmed Tinubu has signed an Executive Order to introduce zero tariffs, excise duties, and VAT on specialised machinery, equipment and pharmaceutical raw materials to bolster local production of essential healthcare products.  

The announcement was made by the coordinating minister of Health and Social Welfare in Nigeria, Prof. Muhammad Ali Pate, on his X page.  

This initiative focuses on pharmaceuticals, diagnostics, medical devices such as needles and syringes, biologicals, and medical textiles, positioning Nigeria to enhance its healthcare value chain significantly. 

 According to Pate, the minister of Justice and Attorney General of the Federation, Prince Lateef Olasunkanmi Fagbemi SAN, is now to take the next steps towards adapting the order.  

The executive order 

The Executive Order, which was a significant step in the Initiative for Unlocking the Healthcare Value Chain approved by the President in October 2023, emphasizes economic incentives to stimulate domestic manufacturing.  

It introduces zero tariffs, excise duties, and VAT on key machinery, equipment, and raw materials, reducing production costs and enhancing the competitiveness of local manufacturers.  

• Items covered under this directive include Active Pharmaceutical Ingredients (APIs), excipients, and other crucial materials for producing drugs, syringes, Long-lasting Insecticidal Nets (LLINs), and Rapid Diagnostic Kits. 
• The Order mandates the establishment of market-shaping mechanisms such as framework contracts and volume guarantees, to support local manufacturers.  

“In a transformative move to revitalize the Nigerian health sector, His Excellency President Bola Ahmed Tinubu, GCFR, has signed an Executive Order aiming to increase local production of healthcare products (pharmaceuticals, diagnostics, devices such as needles and syringes, biologicals, medical textile, etc.),” 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.” 

The Order calls for collaboration among the Ministers of Health, Finance, Industry, Trade and Investment to develop a Harmonized Implementation Framework.  

• This framework aims to expedite regulatory approvals and reduce bureaucratic bottlenecks, facilitating smoother operations for local businesses.  
• Agencies including the Nigeria Customs Service, NAFDAC, SON Nigeria, and FIRS Nigeria are tasked with ensuring swift implementation, with special waivers and exemptions effective for two years. 

This move signals a shift towards market-based incentives, aiming to encourage medical industrialization and reduce reliance on imports.  

By fostering local production, the initiative is expected to lower healthcare costs, create jobs, and retain economic value within Nigeria. 

What you should know 

In a webinar held in May 2024, the Director General of NAFDAC, Prof. Mojisola Adeyeye, and the Coordinating Minister of Health and Social Welfare, Prof. Ali Pate, addressed the escalating costs of medicines in Nigeria.  

• They emphasized that the administration’s policies would soon reflect positively on the affordability of essential medical commodities.  
• Prof. Adeyeye highlighted that rejuvenating the local pharmaceutical industry could mitigate the high cost of medicines, exacerbated by the devaluation of the Naira and the departure of multinational companies. 
• Under her leadership, NAFDAC initiated the “5 plus 5” regulatory scheme, encouraging importers to transition to local manufacturing.  
• This scheme has catalyzed significant growth in the local pharmaceutical sector, with over 30% of new companies resulting from this initiative. 

Prof. Pate reiterated the administration’s focus on addressing the root causes of high pharmaceutical costs, which include Forex devaluation and infrastructure deficits.

He stressed that expanding the national health insurance scheme could alleviate the financial burden on Nigerians, making healthcare more affordable through a third-party payer system.