Economy
MAN Urges FG to Suspend Proposed 2023 Fiscal Policy Measures
By Adedapo Adesanya
The Manufacturers Association of Nigeria (MAN) has asked the federal government to suspend the planned excise duty increase on alcoholic beverages and tobacco, arguing that the headwinds in the economic environment would put more pressure on members.
At a stakeholders’ meeting on Tuesday, MAN raised significant concerns about the provisions of the 2023 Fiscal Policy Measures (FPM), including the record increase in excise on beverages and tobacco and the introduction of a tax on Single Use Plastics (SUP), amongst others.
Speaking at the event, the president of the association, Mr Festus Meshioye, lamented that the FG, despite past assurances that it would not increase excise in beverages and tobacco, reneged and has planned a new increase as contained in the 2023 Fiscal Policy Measures (FPM).
The Muhammadu Buhari administration initiated a 3-year excise roadmap system in 2018 after extensive consultation with the industry, and the roadmap ran successfully until its conclusion in 2021 without any change or issues.
MAN said this enabled the industry to plan its operations, given the certainty in excise successfully. In 2021, the government retained the excise rates for 2020/21 until May 2022, while it used the 1-year period to engage extensively with the industry to decide on a revised roadmap.
Following this engagement, the government released the 2022 FPM with a revised 3-year excise roadmap which, though providing for higher excise rates, still took into consideration input from the industry and the potential impact on the economy.
However, barely five months into the implementation of the 2022 excise roadmap, the industry became aware of fresh plans by the government to increase excise rates further.
MAN bemoaned this development and said this signifies ‘an increase on the increase’ since there was already an approved increase in place for 2023.
Mr Meshioye said that the manufacturing sector is immersed in an unprecedented crisis and an acute recession due to extraordinary challenges, which he said include “sustained scarcity of naira which has led to a crash in consumer purchases; limited access to foreign exchange, which has led the industry to purchase foreign exchange from the parallel market, thereby increasing costs; high inflation which is driving up the cost of operation and prices of products and a struggling economy.”
“This has impacted the industry. For instance, the brewing sector suffered a massive decline of 169 per cent in profit before tax in Q1 2023. Also, the industry turnover for non-alcoholic beverages and tobacco declined by 15 per cent, while gross profit and profit before tax declined by 31 per cent and 96 per cent within the same period, respectively,” he revealed.
He also noted that other worries include the burdensome increase in excise on beer and tobacco, which have tripled and quintupled as well as the impact on sales due to the Naira scarcity.
He warned that, “A continuing decline in sale volumes will necessitate production cuts and a reevaluation of investments in the sector. Specifically, if sales proceeds can no longer sustain business overheads and operating expenses, businesses will be forced to scale down their operations which would result in factory closures, job losses, a decline in exports, and much more.”
MAN also warned that a decline in sales and profitability of the industry would result in a decline in the industry’s total tax contribution to the government because company income tax (CIT), value-added tax (VAT), and education tax are directly tied to the performance and profitability of the companies.
The association further warned that it would not be able to support other businesses within its value chain, cutting across agriculture, logistics, bottling, labelling, and packaging businesses, as well as distribution, wholesale, and retail businesses, catering to over 950,000 direct and indirect employees.
MAN then called on the outgoing government to suspend the 2023 FPM and retain the 2022 -2024 excise duties roadmap as approved in the 2022 FPM to foster stability in the affected sectors and their value chain in the interest of the national economy.
By Adedapo Adesanya
The Naira appreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, July 17, by N1.35 or 0.07 per cent to N1,380.18/$1 from N1,381.53/$1.
It also improved its value against the Pound Sterling in the same market segment during the session by N11.75 to trade at N1,854.42/£1 compared with the previous day’s N1,866.17/£1, and gained N5.69 against the Euro to sell at N1,576.99/€1 versus Thursday’s closing price of N1,582.68/€1.
In the same vein, the Naira chalked up N1 against the United States currency yesterday at the GTBank forex desk to quote at N1,388/$1, in contrast to the preceding day’s N1,389/$1, but closed flat at the black market at N1,405/$1.
The appreciation of the Nigerian currency on Friday came amid fresh signals that Nigeria is building its external reserves for protection against shocks and excessive currency volatility.
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, said the country’s gross reserves had risen above approximately $52 billion by 15 July, while net reserves had increased from about $3 billion when the current CBN leadership took office to more than $40 billion.
Mr Cardoso linked the increase in reserves to reforms that had restored greater confidence in the foreign exchange system. He also pointed to efforts to diversify foreign currency inflows, including policies designed to increase remittances through official channels.
He noted that monthly diaspora remittances had risen above $600 million and the CBN expected them to reach approximately $1 billion by the end of 2026. The target is part of a broader effort to grow reserves through recurring inflows rather than temporary measures.
The improvement, he argued, had strengthened Nigeria’s capacity to respond when unexpected events threatened market stability.
The apex bank has also launched a new digital platform that will track every foreign exchange transaction involving Bureau De Change (BDC) operators, marking a major step in its efforts to improve transparency and strengthen oversight of Nigeria’s retail forex market.
As for the crypto market, prices were up as markets overlooked geopolitical developments and macro forces weighing on the whole market ecosystem rather than anything crypto-specific, with Cardano (ADA) up by 4.6 per cent to $0.1661.
Bitcoin (BTC) jumped by 1.8 per cent to $63,968.32, Ethereum (ETH) improved by 0.9 per cent to $1,843.88, Dogecoin (DOGE) also rose by 0.9 per cent to $0.0723, Solana (SOL) soared by 0.6 per cent to $74.90, Ripple (XRP) also appreciated by 0.6 per cent to $1.08, and Binance Coin (BNB) advanced by 0.1 per cent to $567.32.
However, TRON (TRX) depreciated by 0.2 per cent to close at $0.3218, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The prices of the crude oil grades rose Friday, as fighting between the US and Iran continued in the Middle East, leading to further attacks in Bahrain, Jordan, Kuwait, Oman, Qatar and Syria.
Brent crude futures advanced by about 4.6 per cent to $88.10 per barrel, while the US West Texas Intermediate (WTI) futures gained about 4.5 per cent to settle at $82.49 per barrel.
US forces stepped up attacks on Iranian sites, reportedly striking key bridges, railways, and an airport, prompting retaliatory action by Iran.
US Central Command said that it had completed its sixth consecutive night of strikes against Iran, hitting dozens of military targets such as military logistics infrastructure and maritime capabilities.
Centcom said more than 50,000 service members were operating across the Middle East, adding that they “remain vigilant, lethal, and ready.”
Iran said it attacked the US targets in Bahrain, Jordan, Kuwait, Oman, Qatar and Syria in retaliation for the latest round of strikes by the Americans.
Kuwait said Iran attacked a power and water desalination plant as fighting escalated in the Persian Gulf, saying that the attack damaged the facility that sparked a fire that affected a large number of its electricity-generating units, according to The Kuwait Times.
Kuwait is heavily dependent on desalination plants for potable water. Analysts have long feared that Iran would strike infrastructure that is critical to supporting civilian life in the Middle East.
A tanker was hit by a projectile off the coast of Oman, causing minor damage, the United Kingdom Maritime Trade Operations Centre said in an incident report Friday. Iran has repeatedly attacked tankers over the past week as it tries to force civilian ships to transit the Strait of Hormuz through its waters.
The escalating fighting comes as the fragile truce reached last month has collapsed, once again disrupting energy flows through the strategically vital Strait of Hormuz, which typically handles around 20% of the world’s oil traffic.
Earlier in the week, President Donald Trump said American forces would target Iran’s infrastructure next week unless the two sides reached a diplomatic breakthrough.
Iran has asked Yemen’s Houthis to close the Red Sea oil route if the US targets Iranian power infrastructure.
Market analysts noted that Iran and the US still have strong economic incentives to avoid a complete breakdown in talks, with the US seeking lower oil prices ahead of the November midterm elections and Iran reluctant to forgo economic incentives.
By Adedapo Adesanya
Despite signs that Nigeria’s headline inflation is easing, rising food prices continue to threaten the country’s inflation outlook, the chief executive of the Centre for the Promotion of Private Enterprise (CPPE), Mr Muda Yusuf, has warned.
He noted that structural inflationary pressures in the real economy remain pronounced despite improving macroeconomic stability.
In a policy brief released following the inflation report, he noted that headline inflation eased marginally, while month-on-month change moderated from 1.75 per cent to 1.66 per cent, indicating that headline inflation has largely plateaued.
According to him, the dominant concern in the latest inflation report is the renewed acceleration in food inflation.
This growth, he said, suggested that food prices have resumed an upward trajectory after a brief period of moderation.
Warning that a renewed increase in food inflation has significant economic and social implications, he stressed that food inflation remained the biggest driver of Nigeria’s cost-of-living crisis, stressing that rising food prices continue to erode household purchasing power, worsen poverty and food insecurity while weakening the inclusiveness of the current reform programme.
He maintained that sustained moderation in food prices is critical to improving citizens’ welfare and strengthening public confidence in the ongoing economic reforms.
Acknowledging the easing of core inflation as encouraging, he drew attention to the persistence of urban inflation.
At 16.08 per cent, urban inflation exceeded the national headline inflation rate of 15.91 per cent, while month-on-month urban inflation increased from 1.99 per cent to 2.13 per cent.
According to Mr Yusuf, the figures indicated that inflationary pressures remained particularly intense across urban centres.
He attributed the rising urban inflation partly to increasing population displacement from rural communities affected by insecurity, expressing worry that as more households migrate to urban areas, demand for housing, transportation, utilities and other essential services would increase, adding to inflationary pressures and creating additional urbanisation challenges.
Addressing insecurity in farming communities, he said, was important not only for protecting lives and property and boosting agricultural output but also for easing cost pressures in urban centres, adding that the June CPI data reinforced the view that Nigeria’s inflation challenge is predominantly structural rather than monetary.
On the monetary policy outlook, he said the data do not justify further monetary tightening, arguing that headline inflation has largely stabilised.
The CPPE chief expected the Monetary Policy Committee (MPC) to retain the current monetary policy rate at its next meeting, adding that the priority is for monetary and fiscal authorities to work together to accelerate structural reforms to expand food supply, improve logistics, reduce energy and production costs, lower debt service costs, as well as strengthen domestic value chains.
