The Federal Government has begun implementing major cuts to import duties on essential goods, including food items, passenger vehicles, mass transit buses, electric vehicles and manufacturing equipment, as part of efforts to cushion the effect of Nigeria’s rising cost of living.
The new rates, which took effect this July, are contained in the 2026 Fiscal Policy Measures approved by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.
The policy marks one of the biggest changes to Nigeria’s tariff system in recent years, affecting 127 tariff lines covering household goods, transportation, and industrial production.
It comes at a difficult time for the economy, with Nigerians still grappling with high food prices, transport costs and weak purchasing power. Although inflation has dropped from its peak of about 33 per cent in late 2024, S&P Global recently raised its 2026 inflation forecast for Nigeria to 16.9 per cent, citing global energy shocks that have pushed up petrol prices.
Food Items Get Duty Cuts
Food staples make up a major part of the new measures. Duty on bulk rice has dropped from 70 per cent to 47.5 per cent, while broken rice will now attract 30 per cent duty. Raw cane sugar duties have been reduced to between 55 and 57.5 per cent, and crude palm oil duty has fallen from 35 per cent to 28.75 per cent.
The cuts are meant to bring down the cost of staple foods and ease production costs for food manufacturers, though analysts caution that lower duties may not automatically mean cheaper food, given the exchange rate, high fuel costs, and port charges still in play.
Relief For Vehicles And Transport
Duty on passenger vehicles has been slashed from 70 per cent to 40 per cent, while mass transit buses and electric vehicles have been fully exempted from import duty. Manufacturing machinery now attracts zero duty, a move aimed at boosting local industry.
Transport operators who rely on imported vehicles for haulage and urban transport are expected to benefit, as many currently operate ageing, fuel-inefficient fleets. Industry watchers believe the policy could gradually reduce the cost of importing new vehicles, though the effect on retail prices may take time to show.
Possible Effect On Food Prices
Since transport costs are a major factor in food pricing — particularly for staples like sorghum, maize, yams and cassava moved from the North to southern markets — a reduction in haulage costs could eventually affect retail food prices. However, stakeholders say the impact will likely be slow rather than immediate, especially with fuel prices still above ₦1,000 per litre despite crude oil falling below $73, and the exchange rate hovering between ₦1,400 and ₦1,500 to the dollar.
Public commentator Kehinde Aluko questioned the consistency of government economic policy, noting that Nigeria had for years used high tariffs to protect local farmers from cheap imports. He warned that the sudden tariff cuts on rice and other items could hurt local farmers and shake investor confidence.
According to him, the government is essentially shifting the tax burden from imports to consumption, pointing to new excise duties on beverages, alcohol and tobacco effective from July 1, alongside a new “green tax” on higher-engine vehicles — meaning relief at the ports could be offset by higher prices elsewhere.
Importers, Dealers Split On Impact
Importers and freight forwarders say tariff cuts alone will not solve the problem, pointing to exchange rate volatility, port charges, logistics costs and clearance delays as bigger factors in the final cost of goods. They recalled that a similar vehicle duty cut from 35 per cent to 10 per cent under the Buhari administration in 2021 had little effect on prices due to these same issues.
Iwayeye Olatunji of Inspired Cars said past duty cuts barely moved vehicle prices, since other charges tied to importation remain unchanged. Freight forwarders’ association president Frank Ogunojemite said the real test of the policy will be its effect on the cost of doing business and the cost of living, not just the announcement itself.
Importer Clinton Ikechukwu Okoro of Globe Joy Investment confirmed the new rates have taken effect at the ports but said there remains a disconnect between policymakers and industry operators, noting that vehicle imports have declined in recent years despite past duty cuts.
Manufacturers Warn On Local Industry
Luqman Mamudu of Transtech Industrial Consulting argued that the 40 per cent tariff differential on passenger vehicles is too small to protect local manufacturers, and called for stronger government support, including tax incentives, to attract global automakers to set up production in Nigeria.
He was especially critical of the zero-duty policy on commercial vehicles, warning it could damage Nigeria’s local vehicle assembly industry, which he said had made real progress under the National Automotive Industry Development Plan. He recalled that a similar tariff cut in 2020 led to the shutdown of many assembly plants.
However, Prince Ajibola Adedoyin of the Association of Motor Dealers of Nigeria welcomed the policy, saying it would improve vehicle availability and affordability for buyers.
As the tariff cuts take effect, the coming months will show whether Nigerians see real relief in food, transport and vehicle costs, or whether exchange rate pressure and port charges cancel out the gains.
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