The Manufacturers Association of Nigeria (MAN) has praised the Federal Government for granting a 7.5 percent Value Added Tax (VAT) waiver on Automotive Gas Oil (AGO), commonly known as diesel. This development is a significant win for the real sector, says Mr. Segun Ajayi-Kadir, Director General of MAN.
In his Independence Day address on October 1st, President Bola Tinubu outlined various reforms to invigorate the Nigerian economy. Among them, he promised the introduction of Compressed Natural Gas (CNG) buses and increased investments in Micro, Small and Medium Enterprises (MSMEs). He also pledged provisional cash transfers to 15 million households, food relief packages, and the 7.5 percent AGO tax waiver, among other measures.
Ajayi-Kadir noted that the tax waiver was a result of efforts by the association and other members of the Organised Private Sector of Nigeria to find common ground and avoid an economic crisis. He emphasized that the manufacturing sector, already on the brink of recession, faces numerous challenges.
The removal of VAT on diesel is particularly significant for manufacturers, as diesel is a crucial input in their production process. It powers machines and fills energy gaps caused by inconsistent power supply from the national grid. With diesel prices exceeding N1,000 per liter, this waiver is expected to alleviate production costs and transportation expenses, benefiting workers and the economy at large.
However, Ajayi-Kadir expressed concerns about the six-month time frame for the tax waiver. He questioned whether a more permanent and impactful solution could be devised. He also stressed the importance of broadening the joint committee’s representation to include stakeholders from various economic sectors.