West Africa is being taxed to death
IPN Opinion article
The Guardian (Nigeria)
Many West African governments are inflating the prices of medicines for their own citizens with unnecessary import taxes. Our new research "Death and Taxes" reveals the scale of the problem and the worst offenders in the region: Nigeria and Ghana.
These hidden taxes on medicine are a scandal. In February 2009, African Union Commissioner for Social Affairs Bienc Gawana said "Africa's difficulties in meeting the health needs of the population - particularly of mothers, newborns and children - is constrained by limited availability of drugs at affordable prices."
High-priced medicines hurt the poor the most, as they must often pay out of their own pockets for medicines. The rich can usually afford to let their insurance carry the cost. So, in a region with little viable state health infrastructure, tariffs on medicines are a particularly regressive form of taxation. They are targeted specifically at the sick and punish the poor. There is no justice in that. Yet the Nigerian government, for instance, marks up the price of imported drugs by a massive 14.81% on average, making it the second highest taxer of life-saving medicines in the world, after Burundi.
Despite suffering from a very high burden of infectious and water-borne diseases such as pneumonia and diarrhoea, Nigeria also slaps a 20% duty on imported antibiotics containing penicillin - the highest rate in the world. Its neighbour Ghana inflates the price of medicines by an average of 6.55%, making it the second worst offender in West Africa, after Nigeria. Ghana also increases the price of vaccines and antibiotics by 10% in the same way. It seems perverse in the extreme that governments are themselves guilty of making drugs more expensive. Congo, Chad, Equatorial Guinea and Gambia also mark up drugs to the tune of five per cent. It all raises negligible sums for government coffers but can make a very real difference to a poverty-stricken mother trying to buy medicine for her baby.
By contrast, other countries are gradually phasing out such tariffs on medicines. Over the last few years Gabon and Cameroun have abolished these tariffs, joining Cote d'Ivoire, Burkina Faso, Mali, Niger, Senegal and Benin in the region. The European Union, USA, Canada and many parts of East and Southern Africa are also tariff free, with both Rwanda and Kenya removing import taxes since 2005, joining the likes of South Africa, Zambia, Tanzania and Malawi. Globally, the average is 3.5%.
At the 2005 Ministerial meeting of the World Trade Organisation in Hong Kong, the USA, Switzerland and Singapore proposed that all countries should move towards making medicines tariff-free. Since then, there has been encouraging progress made by many countries, in particular Gabon and Cameroun. However, the picture in the two regional powerhouses is less promising. Ghana's average tariff remains unchanged since 2000 and Nigeria's has only decreased slightly.
There is no reason to delay. Abolishing tariffs won't bring these governments' tax revenues down by much at all. According to a 2005 World Health Organisation study, tariffs amount to less than 0.1% of GDP in over 90% of countries: a negligible amount.
People in West Africa have long faced an uphill struggle in gaining good healthcare. State hospitals are generally under-equipped, there are too few doctors and nurses, and pharmacies are often out of stock. As such, it is highly unlikely that countries in the region will meet the health-related Millennium Development Goals by 2015.
Many of these problems are hard to solve, but tariffs that raise the price of lifesaving medicines can be ended with a stroke of the pen. There is no justification for taxing the sick. Governments should dismantle these barriers to good health as soon as possible.
- Stevens is a Senior Fellow at International Policy Network, a London-based think tank, and author of Death and Taxes, published this week.