Nigeria aims for lower transportation costs to tackle food inflation

By Felix Onuah
ABUJA, Feb 24 (Reuters) - Nigeria plans to cut import duty
on tractors and mass transit vehicles to try to reduce
transportation costs and tackle high food prices contributing to
double-digit inflation, the finance minister said on Wednesday.
The government cut import duty on tractors to 5% from 35%
and mass transit vehicles to 10% for transport of more than 10
persons and trucks from 35%, according to the finance act due to
be implemented this year.
"When you look at the components that constitute inflation,
the largest contributor is food. If you decouple it, the largest
contributor to food inflation is the cost of transport,"
minister Zainab Ahmed told reporters in Abuja.
"Once this implementation takes full effect, we're hoping
that we will be able to see more tractors ... more mass transit
buses ..., reducing the cost of transportation as a result, and
also having an impact on food prices," she said.
Inflation in Nigeria, which has been in double digits since
2016, worsened with the COVID-19 pandemic. Food prices rose 1.01
percentage point from the previous month to 20.57% in
January. Nigeria exited its second recession since 2016 in the fourth
quarter, caused by the pandemic-induced oil price crash that
slashed state revenue, created large financing needs and
weakened the naira.
President Muhammadu Buhari has made investment in rail and
road a main focus of his administration. However, low revenues
has slowed progress.
Ahmed said the government was exploring ways to reduce
transportation costs. Animal feeds and equipment lease will be
exempt from value added taxes, she said.
The International Monetary Fund this month urged Nigeria to
phase out the central bank's financing of the government deficit
to reduce inflation. (Writing by Chijioke Ohuocha; editing by Grant McCool)