Economy
Food Beverage Makers Threaten to Relocate Factories from Nigeria
By Adedapo Adesanya
Employers of labour in the food and beverage sector under the aegis of the National Union of Food Beverage and Tobacco Employees (NUFBTE) say they are ready to leave Nigeria and relocate their factories to neighbouring West African countries over alleged outrageous excise duty on carbonated drinks and multiple taxation by the federal government.
The food beverage makers called on the federal government to take urgent action to save the business environment from collapsing.
They made their grievances known in separate letters titled Federal Government Save Our Soul, Food Sector is Dying because of Multiple Excise Duty/Taxation sent to the Speaker of the House of Representatives, Mr Femi Gbajabiamila; the Minister of Labour and Employment, Mr Chris Ngige; and the President of the Nigeria Labour Congress (NLC), Mr Ayuba Wabba.
The letters signed by the President of NUFBTE, Mr Lateef Oyelekan, called on the central government to save the sector from extinction as the 10 per cent excise duty placed on carbonated drinks and excess taxation has caused the sack of over 5,000 employees in the last eight months.
They threatened to relocate their factories to neighbouring countries as the next line of action, where production cost is lesser, and the finished products would be brought back to Nigeria to sell, putting Nigeria at the receiving end.
The group said the introduction of the excise duty had crippled the business since January this year till date, saying, “The life span of finished products (FCMG) is six months. Billions of products have expired and will be discarded because of the price increase of the finished products.
“Billions of naira in raw materials of the products will expire in December and January. The production of goods daily, which was formerly 12 hours per day, six days a week (Monday to Saturday), has now been reduced to eight hours per day and three times a week.
“Companies that have six production lines have shut three lines down, and most companies are now left with three lines to produce due to the excess percentage on excise duty and taxation. Companies are struggling to produce.”
The letter read further, “Having said that, in the past years, companies like Nigeria Bottling Company, Nigeria Breweries Limited, Nestle, Seven-Up Bottling Company, International Breweries, Nigeria Flour Mills, to mention a few engaged Technical school holders, GCE holders, OND holders, HND holders and train them in the company’s technical training college for a year, after which they were employed. This is not the case again in recent times.
“Furthermore, each of the aforementioned companies employed close to 1000 workers in the past years, but sadly this exercise has stopped in the past two years due to the outrageous excise duty and taxation affecting the sector.”
By Adedapo Adesanya
Nigeria’s inflation rate edged up to 24.23 per cent in March, according to the National Bureau of Statistics (NBS) on Tuesday.
It was the first time since the Consumer Price Index (CPI) has risen since it was rebased in January by the stats office, which made the base year 2024 from the previous 2009.
The new rate indicates an upward movement of 1.05 per cent from the 23.18 per cent reported in February 2025, signalling a return to levels (24.48 per cent) recorded in the beginning of the year after the CPI rebasing.
This latest figures came at a time that the United States President, Mr Donald Trump, has unleashed a trade war that has triggered a sharp selloff in the price of oil, Nigeria’s main export and led to the weakening of the Naira, which will push up import costs, though this should reflect in the next CPI numbers next month.
Although the US administration announced a 90 per cent day pause on the 14 per cent reciprocal tariffs last week, its felt impact remains, as it continues to fight China.
The Nigerian government have announced plans to boost its non-oil imports to tackle the blowbacks from the trade war, which will heavily impact the global economy.
The rise in inflation will also present a challenge to the Central Bank of Nigeria (CBN) regarding interest rates, which it paused at its last meeting.
By Adedapo Adesanya
Fitch Ratings has projected Nigeria’s external debt service to reach $5.2 billion this year from $4.7 billion in 2024, though it maintained a stable outlook for the country in its latest rating.
The agency also cited a minor delay in the payment of a Eurobond coupon due on March 28, 2025, as a reflection of persistent challenges in public finance management.
The rating firm had upgraded Nigeria’s long-term foreign-currency issuer default rating to ‘B’ from ‘B-’, with a stable outlook.
The $5.2 billion in debt service, according to Fitch, includes $4.5 billion in amortisation payments and a $1.1 billion Eurobond repayment due in November.
The development highlights the growing pressure on public finances despite ongoing economic reforms by the federal government.
Fitch noted, “The government external debt service is moderate but expected to rise to $5.2 billion in 2025 (with $4.5bn of amortisations, including a $1.1 billion Eurobond repayment due in November 2025), from $4.7 billion in 2024, and fall to $3.5 billion in 2026.”
It warned that although Nigeria’s external debt service remains within manageable levels, high-interest costs, weak revenue performance, and limited fiscal space remain significant concerns, adding that general government debt was expected to remain at about 51 per cent of GDP in 2025 and 2026.
However, it expressed concerns over the government’s revenue position, noting that interest payments will consume a substantial portion of income.
“We expect general government revenue-to-GDP to rise but to remain structurally low (averaging 13.3 per cent in 2025–2026), largely accounting for a high general government interest/revenue ratio, above 30 per cent, with federal government interest/revenue ratio of nearly 50 per cent,” it stated.
The company observed that Nigeria’s gross reserves rose to $41 billion at the end of 2024, before declining to $38 billion due to debt service payments.
Despite this, Fitch expects the country’s reserves to average five months of current external payments over the medium term, above the median for similarly rated economies, adding that recent policy reforms had contributed to increased foreign exchange inflows and better monetary stability, with inflation projected to average 22 per cent in 2025.
“Net official FX inflows through the CBN and autonomous sources rose by about 89 per cent in Q4 2024. We expect continued formalisation of FX activity to support the exchange rate, although we anticipate modest depreciation in the short term,” a part of the report stated.
It commended the government’s commitment to economic reforms, including the removal of fuel subsidies, liberalisation of the exchange rate, and tightening of monetary policy, noting that these steps had improved policy credibility and strengthened Nigeria’s ability to absorb shocks.
However, the agency warned that risks to Nigeria’s external and fiscal position remained, particularly if oil prices fall or policy implementation slows down.
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