•Aganga: Nigeria to post budget deficit of 6.1% of GDP
By Francis Ugwoke and Obinna Chima with Agency Report, 11.29.2010
The Federal Government has made a volte-face on its economic policy, as it has lifted the ban placed on the importation of textile materials, furniture, toothpicks and cassava products. It also raised the age limit placed on importation of vehicles into the country, from 10 to 15 years. The Federal Government had in 2008 placed a ban on all types of textile materials into the country.
The new economic policy, which is contained in a circular signed by the Minister of Finance, Mr. Olusegun Aganga, has been distributed to the Nigeria Customs Service (NCS) and Destination Inspection Agents (DIAs).
In removing the items from the import prohibition list, the government introduced a 20 per cent duty on the products and a 15 per cent surcharge as new levy.
The circular stated that government had also introduced 10 per cent duty rate and another 10 per cent levy on health and energy drinks which had been excluded from import prohibition. This followed the pressure from the Manufacturers Association of Nigeria (MAN) which argued that allowing importation of textile materials into the country was killing local manufacturing firms.
However, since the ban, importers and freight forwarders have cried out that such ban was a stumbling block to international trade. It is envisaged that the new economic policy is likely to pitch manufacturers against the Federal Government.
Also in the circular, government raised the age limit of vehicles to be imported into the country from 10 years to 15 years.
What this means is that older fairly used cars can now come into the country through approved routes instead of the current trend where such older vehicles are smuggled in through unapproved border routes.
A source close to the Ministry of Finance told THISDAY yesterday that one of the reasons why government removed textile materials from import prohibition list was to check the high rate of smuggling them into the country.
Freight forwarders, who spoke to THISDAY, commended the Federal Government for the new policy, saying the measure would check years of smuggling of the products into the country. Founder, National Associa-tion of Government Approved Freight Forwarders (NAGAFF), Dr. Boniface Aniebonam, said the measure showed that the present administration is a listening government.
Aniebonam said unbanning the items, particularly textile materials and the review on age limit on vehicles to be imported would address the problems of smuggling. Meanwhile, Nigeria will post a budget deficit of about 6.1 per cent of its Gross Domestic Product (GDP) this year following a drop in its projected revenue, Finance Minister Olusegun Aganga has said.
Bloomberg quoted the finance minister yesterday to have put the estimated expenditure this year at N5.16 trillion just as he placed the forecast revenue at N3.18 trillion.
“There were shortfalls in both oil and non-oil revenue,” the minister was quoted to have said. The National Assembly had approved a N4.67 trillion budget after making additions and other changes. The revision was as a result of a drop in oil prices and additional expenditures to cover increased pay and expenses due to next year’s election.
On plans to impose tariff on goods that had been previously prohibited from being imported into the country to protect domestic manufacturers and boost revenue, Aganga said: “Duties ranging from 30 per cent to 40 per cent will be imposed on products including furniture, textiles and drinks. The ban on the items was ‘ineffective,’ and led to smuggling from neighbouring countries that meant the government lost revenue.
“Part of the proceeds from the tariffs will be used to fund the state-owned Bank of Industries, which lends to small businesses while some of it will also be used to support the textile industry.”
The finance minister also reiterated that he expects the proposed Sovereign Wealth Fund (SWF) for investing savings during periods of high oil revenue to become operational before the end of the tenure of the current government in May next year.