Emmanuel OchayiThe Federal Government of Nigeria has introduced a zero Value Added Tax (VAT) policy on pharmaceutical products and medical devices. This move, aimed at lowering the prices of essential drugs, follows the implementation of an Executive Order designed to ease financial pressure on the healthcare sector.
In a statement issued by Alaba R. Balogun, Head of Information at the Federal Ministry of Health, the government confirmed the gazetting of a Harmonised Implementation Framework for this policy. “The Ministry of Health is pleased to announce that the Executive Order has been cleared for gazetting, enabling the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) to commence implementing zero VAT on pharmaceutical products and medical devices,” Balogun said.
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The zero VAT policy is expected to bring much-needed relief to Nigerians, particularly by reducing the cost of essential drugs and medical supplies. The Ministry emphasised that the elimination of VAT would help make healthcare more affordable. A Ministry spokesperson stated, “With the implementation of this Executive Order, we anticipate a notable reduction in the prices of essential pharmaceutical products and medical consumables. This development aligns with the Ministry’s commitment to reducing both the physical and financial pain faced by millions of Nigerians who depend on these critical health supplies.”
The Ministry also noted that local pharmaceutical manufacturers would benefit from the policy, helping to boost the country’s local production of essential healthcare products. This is part of a broader strategy aimed at strengthening Nigeria’s healthcare system and improving access to life-saving treatments.
A Long-Awaited Policy to Address Soaring Drug Prices
The zero VAT policy comes at a crucial time, following years of rising drug prices in Nigeria. This increase was largely attributed to the exit of major pharmaceutical manufacturers like GSK and Sanofi from the country, as well as the depreciation of the Naira. As a result, the cost of drugs, including common medicines like Ventolin inhalers and antibiotics such as Augmentin, skyrocketed, with some prices increasing by nearly 1000%. This made healthcare inaccessible for many Nigerians, particularly the most vulnerable.
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In June 2024, President Bola Tinubu signed four Executive Orders aimed at addressing these challenges. These orders eliminated tariffs, excise duties, and VAT on specialized machinery, equipment, and raw materials used in pharmaceutical production. The goal was to enhance the local manufacturing of healthcare products, including diagnostics, medical devices, and pharmaceutical raw materials, thereby reducing the country’s reliance on imports.
Former Minister of Health, Prof. Muhammed Pate, emphasized the significance of these measures, saying, “This initiative is a key part of our strategy to lower drug prices and improve access to healthcare. By removing VAT on essential medical supplies, we are reducing the cost burden on patients and fostering local production.”
Strengthening Nigeria’s Healthcare System
The VAT exemption is part of a broader effort by the Federal Government to strengthen Nigeria’s healthcare value chain. The Ministry’s 4-point agenda focuses on unlocking the full potential of the healthcare sector through policies aimed at improving local production capacity, reducing drug prices, and ensuring access to quality healthcare for all Nigerians.
The Ministry of Health emphasized that the gazetting of the Harmonized Implementation Framework marked the completion of the third pillar of this agenda, which targets healthcare affordability and availability.
Challenges and Future Outlook
Despite the positive outlook, challenges remain. The depreciation of the Naira continues to affect import costs, while the exit of major pharmaceutical companies has left gaps in the supply of essential drugs. However, the zero VAT policy is a step in the right direction, offering hope for better access to affordable healthcare.
As Nigeria continues to work towards improving its healthcare infrastructure, experts believe that the government’s commitment to reducing VAT on pharmaceutical products will have a lasting impact. The policy is expected to reduce drug prices significantly and promote local manufacturing, ultimately ensuring that Nigerians can access the medicines they need without facing crippling costs.
Balogun concluded, “This is a significant milestone for Nigeria’s healthcare sector. We are confident that this policy will not only lower drug prices but also encourage investment in local pharmaceutical production, benefiting the entire nation.”
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
