Nigeria’s fiscal authorities recently approved and gave directive for the application of new duties on luxury goods as well as goods which have local substitutes. Amaka Ifeakandu reports
The decision of the fiscal authorities was informed by an earlier decision by all 15 members of the Economic Community of West Africa States (ECOWAS), on 15 August 2016, to reach effective application of a common external tariff from 01 January 2017 in order to fast track regional integration.
Under the new ECOWAS Common External Tariff (CET) regime which administers import and export tariffs on regional trade within the West African sub-region, duty on luxury goods such as yachts, Sport Utility Vehicles, boats, sports cars, and other vessels increased from 20 per cent enjoyed by owners of those goods to 70 per cent on the value of the goods. Other major items affected in the duty increase include substitute goods such as sugar cane and salt from 10 per cent to 70 per cent; alcoholic spirit, beverages and tobacco duties increased from 20 per cent to 60 per cent; rice duty increased from 10 per cent to 60 per cent;
packaged cement duty increased from 10 per cent to 50 per cent; and cotton/fabrics materials duty raised from 35 per cent to 45 per cent. Furthermore, duty on table, kitchen or other household items and parts thereof, of iron or steel was increased from 20 per cent to 55 per cent, while duty on used cars popular known as Tokunbo was raised from 10 per cent to 35 per cent. According to analysts with Cowry Assets Management Limited the increase in duties may help bolster non-oil revenue, while also supporting federal government’s import substitution drive which should help diversify public finances further away from over-dependence on crude oil receipts.
Meanwhile, Nigeria’s steel industry is set to received boost following a $100 million Chinese investment to establish scrap and billet manufacturing plants in Nigeria to help meet domestic and external demand and likely lead to reduction in steel importation in the country upon commencement of production activity. According to the investor, HongXing Steel Company Limited, the steel plants located in Aba, Abia State, have achieved 70 per cent completion of the first phase and will become operational by the end of the first quarter of 2017. The Aba projects consist of plant “A”, which will be using local raw materials from scraps, while the plant “B” will be using billets while producing to international standards. On the foreign scene, the Ghanaian economy expanded year-on-year by four per cent in the third quarter of 2016, following a downwardly revised 2.3 per cent growth in the preceding quarter.
The industry sector recovered by +3.9 per cent in third quarter 2016 from-6.5 per cent in second quarter 2016 while growth in the services sector slowed to 4.7 per cent in third quarter 2016 from 5.7 per cent in second quarter 2016 and agriculture grew at a slower 2.3 per cent in the review quarter from 3.6 per cent in the preceding quarter. Elsewhere, the central bank of Egypt retained its benchmark overnight deposit interest rate at 14.75 per cent on 29 December 2016. Egypt’s central bank maintained its contractionary stance following increase in the annual Inflation rate to 19.4 per cent in November, the highest since November 2008 even as pressure on general price level is expected to keep rising in 2017, driven by economic reforms which include subsidy cuts and tax increases. The overnight lending rate was also left steady at 15.75 per cent. Egypt’s monetary authority last reviewed its policy rate, via a 300 bps increase, on November 03, 2016 while also floating the Egyptian pound in order to rebalance dollar shortage and secure a $12 billion loan from the International Monetary Fund (IMF).
