President Goodluck Jonathan, on Tuesday, unveiled the 2012 budget of the federation, putting the annual estimates at N4.749 trillion.
The president, who also re-stated government’s intention to liberalise the downstream petroleum sector, and rejuvenate the agriculture sector so as to create jobs for Nigerians, announced that wheat flour and rice importation would attract 65 per cent and 30 per cent levies respectively.
A direct effect of the fiscal policies announced by the president indicates a likely increase in the price of bread and imported rice, two major staple food items in Nigeria. The price of beer and malt drinks may also be affected by the new policies.
The president, while presenting the 2012 budget to the joint sitting of the National Assembly unfolded an economic plan targetting a total removal of concession or waiver on import duty on rice and wheat.
According to President Jonathan: “From July 1, 2012, wheat flour will attract a levy of 65 per cent to bring the effective duty to 100 per cent, while wheat grain will attract a 15 per cent levy which will bring the effective duty to 20 per cent.
“Similarly, there will be a levy of 25 per cent on brown rice to bring it to 30 per cent. In addition, to encourage domestic rice production, a levy of 40 per cent will be placed on imported polished rice leading to an effective duty rate of 50 per cent. Effective December 31, 2012 all rice millers should move towards domestic production and milling of rice, as the levy of 50 per cent will be further raised to 100 per cent. Let me add here that no waivers or concessions will be entertained for rice and wheat importation,” the president disclosed.
If the budget is implemented, it means a bag of rice, which sells at N8,000 today may, next year go for about N16,000 in the market, while the price of bread, beer and malt drinks may similarly hit the roof top.
While noting that the budget might not represent an end in itself but a tool for creation of wealth, the president also said the government would use trade and tariff in the 2012 budget as an instrument of industrialisation, hence his decision to ensure that machinery for agricultural production, especially for local production of wheat and cassava attracts zero per cent duty.
Though the president was silent on the commonly used term ‘deregulation’, he clearly stated the decision of his administration to ensure some reforms in the different sectors, including the downstream petroleum sector. He added that the liberalisation policy would flow from the power sector, which would benefit from the privatisation agenda that ruled the telecommunications sector in the past.
He said: “We believe that the power sector can benefit from liberalisation and privatisation by attracting investors in the same manner as the telecommunications sector has done. In the same vein, government will come up with policies to encourage investment in the downstream sector through liberalisation so as to create jobs for our people.”
According to the president, the 2012 budget is based on key assumption including a daily crude oil production capacity of 2.48 million barrels per day, crude oil benchmark of US$70 per barrel and a foreign exchange rate of N155 to one US dollar.
2012 BUDGET: Rice, bread, beer to cost more
