In a major policy shift aimed at easing Nigeria’s worsening cost-of-living crisis, the Federal Government has commenced a wide-scale cut in import duties on essential goods, including food staples, passenger vehicles, mass transit buses, electric vehicles and manufacturing machinery.
The new rates, which came into effect this July, were reported to be contained in the 2026 Fiscal Policy Measures approved by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.
The policy is considered to be one of the most significant overhauls of Nigeria’s tariff regime in recent years, with 127 tariff lines targeted with reduced rates across household consumption, transport, manufacturing and industrial activity.
The government’s decision comes at a critical time for the economy as many Nigerians continue to struggle with high food prices, transport costs and weak purchasing power. While inflation had eased from its peak of around 33 per cent in late 2024, concerns have lingered about renewed price pressures.
S&P Global recently raised its 2026 inflation forecast for Nigeria to 16.9 per cent, saying global energy shocks were exerting pressure and had contributed to a sharp rise in petrol prices.
Duty Reduced on Rice, Sugar, Palm Oil
A key part of the new fiscal measures is aimed at food items commonly consumed by Nigerian households.
The revised rates reduced the duty on bulk rice to 47.5 per cent from 70 per cent and broken rice now attracts duty of 30 per cent.
Duties on raw cane sugar have been reduced to a range of 55 to 57.5 per cent and crude palm oil now attracts a duty of 28.75 per cent, down from 35 per cent.
The cuts are intended to reduce the price of staple foods and costs for commercial food producers.
Rice is still a staple in many homes and the cut in duty should ease pressure if the gains are passed on to consumers.
But analysts warned that lower duties alone may not necessarily mean cheaper food, especially with ongoing exchange rate pressures, high fuel prices, logistics costs and port charges.
Relief for Vehicles, EVs, Buses
The new tariff regime also has a major focus on the transport sector.
Duty on passenger vehicles has been cut down from 70 per cent to 40 per cent, a move that is expected to reduce the landed cost of imported cars.
Mass transit buses and electric vehicles were also fully exempted from import duties to lower transport costs and encourage the use of cleaner energy, the government said.
Machinery for manufacturing now attracts zero per cent duty as part of a move to revive industry, reduce production costs and promote investment in local manufacturing.
The policy could assist transport operators who are dependent on imported buses, trucks, minibuses and light commercial vehicles for interstate haulage and urban transport services, stakeholders said.
Many operators are running old fleets, which are expensive to maintain, fuel inefficient and break down frequently. The large number of unserviceable vehicles on Nigerian roads has been blamed on the high cost of vehicle replacement.
Industry players are forecasting that with the reduction in import levies, the landed cost of vehicles will gradually decline. This could enable transport companies and independent operators to renew their fleets at a lower cost.
Potential Impact on Food Prices
It is understood that the policy could also be of advantage to the logistics sector, especially in cases where agricultural produce is transported over long distances by trucks.
Transport costs add a significant amount to the prices of food in Nigerian markets, particularly for staple crops such as sorghum, millet, maize, yam and cassava, which are transported from rural production centres in the North to urban markets in the South.
Stakeholders believe that any savings on haulage costs could eventually be passed on to the final retail prices of food items.
But the effect is likely to be more of a drip than a bang.
Lower vehicle acquisition costs could also improve efficiency in the transport sector by allowing operators to invest in more fuel efficient and reliable vehicles, reduce breakdowns and improve delivery turnaround time.
But these potential gains may be undermined by other structural pressures in the economy.
Crude oil prices have fallen below $73 in the international market, but fuel prices remain above N1,000 per litre. The exchange rate is still fluctuating between N1,400 and N1,500 to the dollar.
These factors mean the reduction in import levies might slow the pace of increases in transport costs, but they will not immediately reduce fares or food prices.
A public commentator, Kehinde Aluko, told the Guardian the policy raised questions about consistency in government economic management.
He said that for years, the Federal Government encouraged local production, especially in agriculture, by using high tariffs to protect Nigerian farmers from cheaper imports.
Aluko warned that a rapid reduction of tariffs on rice and other commodities could damage investor confidence and harm local farmers who had made investment decisions based on protectionist policies.
“The government is not just cutting revenue, it is shifting the tax burden from imports to consumption, he said.
“The government’s strategy is not just about reducing revenues, it’s about a fundamental shift in the tax burden from imports to consumption. We will also be introducing new excise duties on non-alcoholic beverages, alcoholic drinks and tobacco products from July 1, 2026, and a ‘green tax’ surcharge on higher-engine vehicles.
“This means that relief from lower import duties can be offset by higher prices of everyday consumables and luxury items. For the average Nigerian, the near future is a kind of tug of war. “On the one hand, it may become cheaper to buy a car or industrial machinery, but the daily cost of a bottle of soda or a pack of cigarettes will almost certainly go up,” he said.
Aluko, a telecom expert himself, said the real test of the policy would be whether the relief at the ports would outweigh new costs at the checkout counter.
He said the next few months will be a critical test for the economy and the resilience of the Nigerian people as the government changes focus.
Importers fear logjams
Importers, freight forwarders and car dealers said tariff reduction alone may not bring about the desired economic outcome.
Among the major determinants of the final cost of imported goods were the volatility of the exchange rate, multiple port charges, logistics costs, terminal handling fees and delays in cargo clearance, they said.
The argument from them is that the benefits will not be fully achieved by businesses or ordinary Nigerians without dealing with these bottlenecks and tariff cuts.
They noted that tariff adjustments were also implemented on selected products during the tenure of former President Muhammadu Buhari to encourage local production and address economic realities.
The tariff on imported vehicles was reduced from 35 per cent to 10 per cent in 2021.
However, stakeholders said the measure yielded mixed results. While some importers enjoyed lower duties on some items, these gains were largely eaten up by foreign exchange volatility, rising shipping costs, inflation and port related charges.
Thus the expected fall in consumer prices was not entirely realised.
Manager of Client Services at Inspired Cars, Iwayeye Olatunji, said the reduction in import duty on vehicles and spare parts is a welcome development but may not lead to significant reductions in the prices of vehicles.
High exchange rates and other charges related to imports could blunt the new policy, he said.
Olatunji said that previous reduction of duty under the Buhari administration had little impact on the prices of vehicles as only about 10 per cent difference was recorded.
But consumers might not see much price relief because several other costs connected with importing cars are still the same, he said, even though the new tariff looks good on paper.
“Honestly, before, it was mostly on paper. Fine, the duty was reduced but did it really have any direct impact on the market? That’s a different problem. “When the duty is cut, but other supporting fees are still there, the total price doesn’t really change,” he said.
Frank Ogunojemite, the National President of the Africa Association of Professional Freight Forwarders and Logistics of Nigeria, said the policy would not be judged by the announcement but by its practical effect.
He said the key measures would be the impact on the cost of doing business, the prices of imported goods and the overall cost of living.
“The difference is that today tariff reduction alone cannot achieve the desired economic result. The key determinants of the final cost of imported goods remain volatility of exchange rates, multiple port charges, logistics costs, terminal handling charges and delays in cargo clearance. “However, tariff reductions benefits may not be fully felt by businesses or ordinary Nigerians unless these bottlenecks are addressed simultaneously,” he added.
Ogunojemite urged the Federal Government to closely monitor the market responses to ensure that the intended benefits get to consumers and are not swallowed up by inefficiencies in the supply chain.
“Nigerians want to see the benefits beyond policy documents. Lower tariffs should ultimately mean cheaper landing costs, more import activity, better business confidence and cheaper products for consumers,” he said.
Importer sees policy gap.
Clinton Ikechukwu Okoro, importer and Chief Executive Officer of Globe Joy Investment Nigeria Limited, confirmed that the new duty rates have commenced at the ports.
He, however, said the process showed a disconnect between policymakers and operators in the automotive import sector.
The earlier reduction in vehicle duties under the Buhari administration, according to Okoro, did not translate to a significant drop in the prices of vehicles or a boost in imports.
He said vehicle prices have continued to rise sharply, making car ownership increasingly difficult for many Nigerians.
He said that imports of used vehicles have fallen sharply in the last few years despite earlier duty cuts.
Okoro said he was cautiously optimistic the latest policy could encourage vehicle imports if the reductions prove meaningful after a detailed review.
Mixed reactions were received from stakeholders in the automotive sector on the new tariff regime, especially on the importation of vehicles.
Some cautioned that the policy could hurt local vehicle manufacturing, but others argued that it would increase affordability and the availability of vehicles in the market.
The Managing Partner of Transtech Industrial Consulting, Luqman Mamudu, said the tariff difference on passenger vehicles was not sufficient to provide meaningful protection to local manufacturers.
Although effective tariff protection is about 70 per cent, the 40 per cent differential on passenger cars is insufficient to encourage serious investment in vehicle manufacturing, he said.
Mamudu said that Nigeria’s automotive industry still required deliberate protection by the government within the limits allowed under the Economic Community of West African States Common External Tariff.
“The industry requires deliberate protection including full utilization of the Import Adjustment Tax (IAT) window and applicable levies. Those measures can then be phased out gradually as the industry evolves,” he said.
Many foreign vehicle makers get huge government subsidies in their countries, making it difficult for Nigerian assemblers to compete just on tariff protection, he said.
He told the Federal Government to supplement tariff measures with local concessions and incentives to attract global automakers to establish production plants in Nigeria.
“The auto industry has a multiplier effect on the total economic development. “So too much is no support by government,” Mamudu added.
Zero Tax On Commercial Vehicles Slammed
Mamudu also faulted the Federal Government’s decision to impose zero per cent import tariff on commercial vehicles, saying it is too much and could be detrimental to Nigeria’s emerging commercial vehicle assembly industry.
The policy will not much lower car prices, nor help local production, he said.
“Local manufacturers have made strides in increasing local content and commercial vehicle assembly was one of the success stories of the National Automotive Industry Development Plan,” he said.
“Commercial vehicle plants are easier to build and increase local content. “The automotive body building is one area where Nigeria has built a good local capacity over the years,” he said.
Mamudu said that before the 2020 Finance Act, local assemblers only imported engines and carb assemblies as complete parts, while companies like Transit Support and Dangote Industries were beginning to invest in facilities to produce more parts locally.
He said the lowering of import tariffs on commercial vehicles from 35 per cent to 10 per cent in 2020, which was the same as the tariff on fully built imported vehicles, caused the collapse of many assembly plants.
“Nearly every commercial vehicle assembly plant was closed down. “Today, many companies rely on imports, while only a few still import semi-knocked down kits mainly for logistics advantages and to keep their equipment in operation,” he said.
He warned that with tariffs now down to zero, remaining operators may be forced to shut down their assembly facilities altogether.
The National President, Association of Motor Dealers of Nigeria, Prince Ajibola Adedoyin, however, hailed the tariff review, saying it was an improvement.
Adedoyin said the lower tariffs would enhance vehicle availability in the Nigerian market and make vehicles more affordable to consumers.
“It’s an upgrade. “It will make things more accessible and prices more affordable,” he said.
The differing views reflect the difficult balance facing the Federal Government in trying to reduce prices for consumers, ease business costs and protect local production.
For ordinary Nigerians, the next few months will tell whether the tariff cuts will lead to cheaper food, lower transport costs and more affordable vehicles, or whether pressure on the exchange rate, port charges and inflation will eat up the expected gains.
