Insights / Pharma industry

The duty and VAT waiver on pharma raw materials: what buyers should know

By Ava Healthcare19 October 20265 min read

Nigeria has spent the last two years trying to make more of its medicines at home. One of the most concrete steps is a time-limited waiver of import duty and VAT on the raw materials local manufacturers use. If you buy, distribute or sell medicines, it is worth understanding what the waiver does, who it helps, and what it does not change.

What the policy is

In June 2024 President Bola Tinubu signed an executive order setting zero tariffs, excise duties and VAT on specified machinery, equipment and raw materials for healthcare production in Nigeria. It was part of the Presidential Initiative for Unlocking the Healthcare Value Chain, launched in 2023 to grow local production of medicines and medical products.

The Nigeria Customs Service announced on 26 March 2025 that it had begun applying a two-year exemption from import duty and VAT on critical inputs for local pharmaceutical manufacturing, following a directive approved through the Minister of Finance. According to the Customs statement, the inputs covered include:

• active pharmaceutical ingredients (APIs) and excipients;
• other raw materials for making essential medicines;
• reagents and packaging materials;
• inputs for long-lasting insecticidal nets and rapid diagnostic kits.

Who qualifies

Customs said eligibility is restricted to pharmaceutical manufacturers recognised by the Federal Ministry of Health and Social Welfare, and that they must hold a valid Tax Identification Number. Customs also said it would compile quarterly reports on everything imported under the policy.

In other words, this is a support for factories, not for traders. A company that imports finished, packed medicines for resale is not the target of this waiver.

What it could mean for prices and supply

Customs said the policy is expected to significantly lower production costs. Lower input costs give local manufacturers room to price more competitively, invest in capacity, or both. Over time that can mean more locally made options on a pharmacy shelf or a hospital tender, and less exposure to delays at ports and foreign suppliers.

It is sensible to keep expectations realistic, though. Raw-material duties are only one part of a manufacturer's costs. Exchange rates, energy, financing, distribution and regulatory costs all still matter, and a manufacturer decides for itself how much of a saving reaches its price list. Industry voices have welcomed the waiver while asking for the policy to stay consistent, because factories plan investment over years, not months.

The clock is running

Because the exemption was announced as a two-year measure from early 2025, it is due to run until around the first quarter of 2027 unless the government extends or changes it. Buyers who agree long supply contracts or annual tenders should be aware that input costs for local manufacturers could change when the window closes.

This is general information, not legal, tax or regulatory advice. Check the current position with the Nigeria Customs Service, the Federal Ministry of Health and Social Welfare, and your own advisers before making decisions.

What hospital, pharmacy and distributor buyers can do now

• Know where your products are made. Ask suppliers which lines are manufactured in Nigeria and which are imported finished. It helps you anticipate where costs and lead times may move.
• Ask about pricing plans. When you renew a supply agreement, it is fair to ask a local manufacturer how input-cost changes are reflected in its prices, and for how long quoted prices hold.
• Keep quality checks the same. Whether a product is local or imported, confirm its NAFDAC registration number, batch and expiry, and buy only through licensed channels.
• Watch for updates. Look out for the Customs quarterly reports and any announcement about extending the waiver beyond its two years.
• Plan for 2027. If you run annual tenders, build a review point around the end of the waiver into contracts that run past early 2027.

The bigger picture

Policies like this are only one part of building a reliable local medicines industry. Steady demand from hospitals, pharmacies and distributors who are willing to give quality local products a fair hearing matters just as much. The waiver lowers one barrier; buyers and suppliers working together on forecasting, payment terms and quality will decide how much difference it makes.

Sources: Nigeria Customs Service statement on the two-year import duty and VAT exemption for pharmaceutical raw materials (26 March 2025), as reported by Nairametrics and BusinessDay; the June 2024 presidential executive order on healthcare value chain inputs, as reported by Nairametrics and The Guardian Nigeria.

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