The Nigerian government has announced the completion of procedures to implement an executive order that removes Value Added Tax (VAT) and excise duties on pharmaceutical products and medical devices.

This announcement was made on Wednesday through a statement shared on X, signed by Alaba Balogun, the Head of Information and Public Relations at the Federal Ministry of Health and Social Welfare.

This initiative follows the signing of the executive order by President Bola Tinubu four months ago, which aims to enhance local production of healthcare products and lower expenses.

Muhammad Pate, the Coordinating Minister of Health and Social Welfare, shared the news on his X account, detailing that the new order establishes zero tariffs, excise duties, and VAT on designated machinery, equipment, and raw materials.

The minister emphasized that this order is crucial for the success of the initiative to unlock the healthcare value chain, which received presidential approval in October 2023.

The healthcare products targeted by this initiative include pharmaceuticals, diagnostics, devices such as needles and syringes, biologicals, and medical textiles, among others.

Addressing Challenges

Nigeria's pharmaceutical sector has been grappling with significant challenges, particularly the escalating costs of medications across the country.

This situation has been linked to the nation's heavy dependence on imports, a problem worsened by the withdrawal of multinational pharmaceutical companies like GlaxoSmithKline (GSK) and Sanofi.

The reliance on imported pharmaceuticals has impeded local manufacturing efforts and contributed to rising costs.

The government aims to tackle these challenges with the new order, which focuses on enhancing local production and generating employment opportunities.

Mr. Pate explained, "This order signifies a shift towards market-driven incentives that will facilitate the industrialization of the medical sector. Over time, it aims to lower the costs of medical products through import substitution, thereby creating and preserving economic value while fostering job growth within the healthcare value chain."

He also mentioned that the order includes provisions for establishing market-shaping mechanisms, such as framework contracts and volume guarantees, to support local manufacturers.

Implementation Phase

With the order now ready for implementation, a decrease in the prices of essential pharmaceutical products and medical supplies is expected.

"This initiative reflects the Ministry's steadfast dedication to alleviating both the physical and financial burdens faced by millions of Nigerians reliant on these vital health resources," the statement indicated.

The statement further revealed that the finalized executive order and its implementation framework have been approved for publication.

It noted that the ministry will distribute the published copies of the framework to relevant agencies, including the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service, for prompt execution.

"By cultivating an environment that nurtures local manufacturers, we are promoting a healthier, more self-sufficient nation, ensuring that quality healthcare is more accessible and affordable for everyone," the statement concluded.