REVITALISING THE HEALTH SECTOR

President Tinubu’s executive order on zero tariffs for imported pharmaceutical inputs will make a huge difference, writes Cyril Habib

In another landmark step towards deepening local production of healthcare products and reducing cost, President Bola Tinubu has signed an executive order to introduce zero tariffs, excise duties and value added tax (VAT) on imported pharmaceutical inputs.

The order introduces zero tariffs, excise duties and VAT on specified machinery, equipment and raw materials, aiming to reduce production costs and enhance local manufacturers’ competitiveness in the country. Specified items include Active Pharmaceutical Ingredients (APIs), excipients, other essential raw materials required for manufacturing of crucial health products like drugs, syringes and needles, long-lasting insecticidal nets (LLINs) and rapid diagnostic kits, among others.

Crucially, the order also provides for establishing market shaping mechanisms such as framework contracts and volume guarantees, to encourage local manufacturers.

It is expected via the order that stakeholders in the sector on the part of the government would collaborate. This collaboration includes the ministries of health, finance, and industry, trade and investment, to develop a harmonised implementation framework — expediting regulatory approvals and reducing bottlenecks.

To implement the order, agencies including the Nigeria Customs Service (NCS), National Agency for Food and Drug Administration and Control (NAFDAC), Standard Organisation of Nigeria (SON), and Federal Inland Revenue Service (FIRS) “will ensure swift implementation, with special waivers and exemptions effective for two years,” according to the health ministry.

The order is not only timely but significant, signalling a policy change that would not only change the fortunes of the sector but reduce cost of pharmaceutical products as well as ensure growth in local productions.

The sector has been stifled. There has been no policy to unlock the sector despite the overarching needs. The executive order which would loosen and free the sector would not only create employment but ensure that common killer diseases like malaria, could easily be tackled. The order is also expected to pivot Nigeria towards market-based incentives that would encourage medical industrialization, reduce cost of medical products via import substitution.

Indeed, the government via the order aims to create and retain economic value and enable job creation in the health sector. Construction and erection of drug manufacturing facilities in the country is expected to receive another boost. Already, 105 applications have been received by NAFDAC with 35 per cent approved by the agency.

Interestingly, over $20 billion have been invested into the sector by 20 newly registered drug manufacturers with World Health Organisation-compliant facilities that will manufacture quality pharmaceutical and essential medicines for Nigerians.

The development indicates that the executive order will further attract more investors into the sector which will ultimately bring calmness into the troubled sector the government inherited.

The executive order is profound being that local manufacturers who have complained of import duties on key raw materials would now channel their production speedily into pharmaceutical products that Nigerians yearn for. While this does not mean global drugmakers exiting the country are being replaced, it points to progress and would catalyse those remaining in the country to deepen their production through investment.

The order is ultimately expected to have a knock-on effect on out-of-pocket expenses giving Nigerians choice as prices of these pharmaceutical products are expected to drop.

Because the right to healthcare is contingent mostly on their ability to pay, low income earners will have the financial ability to pay and not rely on herbs with their attendant consequences. The order will thus significantly play a crucial role for the rural population to access healthcare products where poverty rates tend to be higher. The majority of rural residents often struggle to afford healthcare services, medications, and transportation costs to reach medical facilities in cities. The order would reduce the cost of these products and make it readily available even in rural areas.

It would also help to reduce the time patients in rural areas wait to get these products as it would spur timely marketing and distribution of these products in the villages.

Habib writes from Abuja