The Federal Executive Council (FEC) has endorsed the domestication of the African Union (AU) Resolution which provides for a new import levy of 0.2% to improve sustainable financing of Nigeria’s membership subscription to the continental body. The announcement was made by the Finance Minister Mrs. Zainab Ahmed, after a prolonged session of the FEC meeting chaired by Vice-President Yemi Osinbajo at the State House, Abuja, on Monday.
She said the CIF – Cost, Insurance and Freight paid by a seller to cover the likely loss or damage to a buyer’s order while in transit – will be charged on imports into Nigeria from AU countries.
However, the import levy exempts goods coming from non-AU states, AU-state imports financed through special purpose facilities, goods meant for aid, and goods that have already been ordered and were in the importation process before the policy was announced into effect.
Purpose Of The New Import Levy Of 0.2%.
“The purpose of this new levy is to enable the African Union member countries pay on a sustainable basis their subscriptions to African Union.
“The Council also approved that for Nigeria, knowing that what will accrue from this new levy will be more than what is required as subscriptions to the African Union, the balance will be put in a special account in the Central Bank of Nigeria and will be used to finance her subscriptions to multilateral organizations as the World Bank, African Development Bank, Islamic Development Bank and institutions like that.
“And if there is any excess left from that in the revenue pool, it will be used to finance the budget,” Ahmed said.
Steps by FG To Collect This Levy?
The FEC further inaugurated an operating committee, chaired by the Vice President for the planning and execution of a national single window – a web portal that would integrate all the government agencies that are operators and implementers in the port business or trading in the port system.
“The trading platform will enable better efficiency of port operations and we project that it will significantly increase government revenues,” said Mrs. Ahmed.
Why The Import Levy Was Introduced By The Union.
The continued and successful execution of the confederation’s programmes require adequate and sustainable financing. However, under existing provisions, the Union’s budget remains underfunded by both the Member States and Development Partners.
On average, 67% of calculated subscriptions is collected annually from Member States. And about 30 Member States on the average default annually, either partially or completely. This has created a considerable funding gap between planned budget and actual funding, hampering the effective delivery of the Union’s agenda.
How Was The 0.2% On Imports Arrived At?
After a careful appraisal of the potentials of all the options, the 0.2% came out as the most workable in the sense that it was attainable; equitable because the rate was the same across all the countries; sustainable in the sense that it would be available over the short, medium to long term; predictable because one could evaluate the projected inflows from existing national data. Also, the African Union could expect to receive funding on time once the arrangement sets in.
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