Price Of Pencils To Rise As FG Mulls Tariff Increase To 35%

The Federal Government has begun moves to increase the tarrif on imported pencils from the current 20 per cent to 35 per cent, THE WHISTLER can authoritatively report.

The move is part of measures aimed at boosting the local capacity of pencil manufacturers in Nigeria as well as reduce the huge import bill spent annually on importation of the product into the country.

Depending on the product, a pack containing 12 pieces of pencil sells for between N1,000 and N1,600 and this is expected to rise with the planned tariff increase.

Nigeria currently spends about N750bn annually to import pencils into the country, according to figure released by the immediate past Minister of Science and Technology, Dr. Ogbonnaya Onu.

Worried by the huge import bill by Nigerians on pencil, it was gathered that the Minister of Industry, Trade and Investment, Niyi Adebayo, had written a letter to the Minister of Finance, Budget and National Planning, Zainab Ahmed seeking an upward review of the tariff.

In the letter to the Finance Minister, Adebayo also sought zero tariffs on pencil production equipment and other related machineries by the Federal Ministry of Finance, Budget and National Planning.

This, it was gathered, is expected to encourage local manufacturing of pencils as well as boost the job creation potentials of the sector.

Sources with knowledge of the plan told THE WHISTLER that the proposal for the upward review is currently being considered by the Tariff Technical Committee (TTC) in the Ministry.

It was also gathered that as part of measures aimed at promoting the Backward Integration Programme in the pencil industry, the Trade Minister has written a letter to Central Bank of Nigeria for the release of N50bn intervention fund for the pencil manufacturing sector.

This website also understands that the request is designed to spur the Backward Integration Programme in the Pencil manufacturing industry as well as to encourage the implementation of Executive Orders 003 and 005.

According to Executive Order 003, Ministries, Departments and Agencies of government are required to grant preference to local manufacturers of goods and service providers in their procurement of the goods and services covering specific areas and with at least 40 per cent of procurement spending:

The areas are uniforms and footwear; food and beverages; motor vehicles; pharmaceuticals; construction materials; information and communication technology; furniture and fittings; and stationery.

In recent times, the harsh economic environment and persistent importation of pencils, coupled with the foreign exchange scarcity and epileptic power supply have hindered Nigeria’s plan for local manufacturing of pencils.

Prior to 2015, there was no Pencil Manufacturing company in Nigeria and the then minister of Science and Technology, Dr. Ogbonnaya Onu had promised that the nation would make pencils in Nigeria by 2018.

However, stakeholders say that since the country began manufacturing pencil in 2019, poor policy formulation by the federal government to encourage operators has been lacking.

This has made it difficult for manufacturers to keep up the competition in the face of continuing pencil imports and the stifling operating environment in the country.

For instance, the Founder/Chief Executive Officer, Bamib Resources and Investments Company Limited, Mr Muideen Ibrahim, had urged the federal government to develop policy that will encourage local manufacturing of pencil.

Describing the business environment as harsh and frustrating, Ibrahim said that the firm had visited 10 states, gone to several ministries, parastatals and agencies without patronage.

He said, “There is no form of encouragement save for Dr. Ogbonnaya Onu who gave us letters to UBEC, ministries of Education and Ministry of Humanitarian Affairs but they all turned us down.

“Nigerians prefer low quality products from foreign countries. Lack of Policy on Pencil has made Nigeria now a dumping ground for low quality Pencils from some foreign countries.

“There is need for urgent intervention fund at Single digit Interest Rate by the Central Bank of Nigeria.”