Nigeria’s New Playbook On Import Duties, Tax Breaks on Hiring, Looks Promising

Very pragmatic move by the government: “The Federal Government of Nigeria has unveiled an ambitious plan that includes tax breaks for companies increasing their workforce and the suspension of import duties on certain goods. These initiatives are part of the forthcoming Inflation Reduction Act, set to be signed by President Bola Tinubu in the coming weeks, as announced by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun.”

The federal government is looking to bolster employment by offering outright tax breaks to companies that hire more staff. In an exclusive interview on AIT’s Money Line, Mr. Edun emphasized the importance of these fiscal incentives to reduce production costs, which have been driven up by the weakened exchange rate and recent policy changes.

He stated, “The Inflation Reduction Act will contain a range of import duties, exemptions, lowering of tariffs, and outright tax breaks for employment. If you employ more people, you will be given a tax break against it. A range of fiscal incentives will be laid out in an executive order which Mr. President will sign in due course.”

Yes, suspend import duties on equipment and machinery, and make it easier for companies to bring those things into Nigeria. As I have noted, Nigeria’s challenge is not that we import. The issue is that we import the wrong things: “As I have noted, in 2022, South Korea’s total imports were $808.09 billion while Nigeria did about $60.35 billion for goods; South Korea is about 25% of Nigeria’s population. But if you check, South Korea imports were largely machinery, equipment, etc for production, while Nigeria’s were for finished goods. “

This playbook is promising because the escape from inflation is by increasing SUPPLY, not just increasing interest rate, as we have been doing, via the apex bank. This new playbook provides new ways of looking at the challenge. I also like the construct of incentivizing hiring people. The next challenge is EXECUTION.

Nigeria to Grant Tax Breaks to Companies Increasing Workforce – Finance Minister

Register for Tekedia Mini-MBA (Sept 9 – Dec 7, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.