Adedapo Adesanya
By Adedapo Adesanya
Beer manufacturers in the country, including Nigerian Breweries, International Breweries, and Guinness Nigeria, have warned that the decision to go ahead with a planned increase in excise duty for alcoholic beverages will force businesses to scale down operations.
Speaking at a press conference organised by the Manufacturers Association of Nigeria (MAN) in Lagos last week, representatives from the brewers’ sector made their grouse known following planned hikes contained in the recently published 2023 Fiscal Policy Measures.
It was revealed that the exponential increase in excise duty in the 2023 Fiscal Policy Measures came as a shock to the industry and was, in effect, ‘an increase on the increase’ since there was already an approved increase in place for 2023.
According to Mr Asue Ighodalo, the new Board Chair of Nigerian Breweries, who was on the panel representing the beer industry, warned that the sector was standing on one leg since it was already in crisis due to an unprecedented crisis brought on by a scarcity of Naira, limited access to foreign exchange, high inflation, and a struggling economy.
“Already, there is a massive decline of -169 per cent in profit before tax in Q1 2023. Increasing the hike at this point is a lose-lose scenario for us and the government.”
He echoed warnings by the MAN President, Mr Festus Meshioye and Director-General, Mr Segun Ajayi-Kadir, that this will result in factory closures, job losses, and a decline in exports, among others.
He lamented that the brewers were already dealing with crashing sales due to the continued drop in the purchasing power of the average Nigerian and that this would further tip the people into a deeper crisis that would see them consume illicit products.
He also pointed out that this will result in the inability of beer manufacturers to support other businesses within their value chain.
“I tell you that this will create a ripple effect cut across agriculture, logistics, bottling, labelling, and packaging businesses, as well as distribution, wholesale and retail businesses,” adding that this sector caters to over 950,000 direct and indirect employees.
“For instance, over 37,000 sorghum farmers rely on the brewing sector for their livelihood.”
The beer manufacturers then noted the premise would send negative signals to current and prospective investors in Nigeria and thereby damage investor confidence.
Earlier this year, the Chief Executive Officer (CEO) of Nigerian Breweries, Mr Hans Essaadi, lamented that the cash crunch in the country caused by the cashless policy of the Central Bank of Nigeria (CBN) was disastrous to its operations.
