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 NASD Over-the-Counter (OTC) Securities Exchange closed higher by 1.41 per cent on Friday, May 15, supported by four securities on the platform.
During the session, FrieslandCampina Wamco Plc added N14.24 to its share price to sell for N159.00 per unit, in contrast to the previous day’s N144.76 per unit.
Further, Central Securities and Clearing System (CSCS) Plc appreciated by N1.34 to N72.34 per share from N71.00 per share, Geo-Fluids Plc improved its price by 4 Kobo to N2.94 per unit from N2.90 per unit, and Industrial and General Insurance (IGI) Plc gained 1 Kobo to trade at 61 Kobo per share compared with Thursday’s closing price of 60 Kobo per share.
As a result, the NASD Unlisted Security Index (NSI) rose by 58.20 points to 4,188.41 points from 4,130.21 points, and the market capitalisation soared by N34.82 billion to N2.506 trillion from N2.471 trillion on Thursday.
During the session, the volume of trades went up by 180.8 per cent to 1.2 million units from 417,349 units, and the value of transactions increased by 29.8 per cent to N29.8 million from N23.2 million, while the number of deals fell by 22.6 per cent to 24 deals from 31 deals.
Great Nigeria Insurance (GNI) Plc ended the day as the most traded stock by value on a year-to-date basis with 3.4 billion units sold for N8.4 billion, followed by CSCS Plc with 60.8 million units exchanged for N4.1 billion, and Okitipupa Plc with 27.9 million units valued at N1.9 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by Resourcery Plc with 1.1 billion units transacted for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units traded for N1.2 billion.
By Dipo Olowookere
The bears overpowered the Nigerian Exchange (NGX) Limited on Friday, sinking it further by 0.76 per cent when the closing gong was struck by 4 pm.
The nation’s flagship equity market was under selling pressure during the session, as investors booked profits after the shares witnessed price appreciation in the past trading sessions.
The energy sector was the most impacted, as it shed 4.43 per cent. The consumer goods index declined by 0.90 per cent, the banking counter decreased by 0.15 per cent, and the industrial goods sector lost 0.08 per cent, while the insurance counter gained 2.42 per cent, which was not enough to salvage the situation.
Consequently, the All-Share Index (ASI) contracted by 1,912.19 points to 250,330.92 points from 252,243.11 points, and the market capitalisation moderated by 1.225 trillion to N160.444 trillion from N161.669 trillion.
Zichis was the worst-performing stock for the session after it gave up 9.97 per cent to close at N29.43, FTN Cocoa slipped by 9.95 per cent to N8.96, The Initiates slumped by 9.90 per cent to N32.30, LivingTrust Mortgage Bank tumbled by 9.88 per cent to N3.83, and International Energy Insurance dropped 9.71 per cent to trade at N2.79.
The best-performing stock was ABC Transport, which grew by 10.00 per cent to N6.27. May and Baker also appreciated by 10.00 per cent to N47.30, SCOA Nigeria surged by 9.98 per cent to N33.05, Trans-Nationwide Express expanded by 9.97 per cent to N7.06, and DAAR Communications jumped 9.76 per cent to N2.25.
Yesterday, investors traded 1.1 billion shares worth N44.3 billion in 65,744 deals compared with the 1.0 billion shares valued at N41.6 billion transacted in 74,822 deals a day earlier. This indicated a dip in the number of deals by 12.13 per cent, and a rise in the trading volume and value by 10.00 per cent and 6.49 per cent, respectively.
Chams was the busiest equity for the day, with 328.5 million units sold for N1.1 billion. UBA traded 61.6 million units worth N2.7 billion, First Holdco transacted 58.7 million units valued at N4.2 billion, Secure Electronic Technology exchanged 51.9 million units worth N45.0 million, and Access Holdings traded 51.8 million units valued at N1.3 billion.
By Adedapo Adesanya
The last trading session of the week at the Nigerian Autonomous Foreign Exchange Market (NAFEX) ended on a negative note for the Naira on Friday, May 15, as it lost N15 Kobo or 0.1 per cent against the Dollar to trade at N1,371.04/$1 compared with the previous day’s N1,370.89/$1.
However, it further appreciated against the Pound Sterling in the same market segment yesterday by N20.77 to close at N1,830.61/£1 versus Thursday’s value of N1,851.38/£1, and gained N7.91 against the Euro to settle at N1,595.07/€1 versus N1,602.98/€1.
At the GTBank FX desk, the Naira lost N2 against the US Dollar during the session to sell at N1,383/$1 compared with the preceding session’s N1,381/$1, and at the black market, it remained unchanged at N1,385/$1.
The Naira is forecast to be broadly stable, supported by Dollar sales by the Central Bank of Nigeria (CBN) amid steady, higher oil receipts, with the market settling into a balance.
Policy direction is also expected to give the market some boost as the CBN said the new edition of the FX market guidelines will deepen liquidity, improve transparency and strengthen confidence in the country’s foreign exchange market.
According to the Governor of the CBN, Mr Yemi Cardoso, the update is due to changing global economic realities, domestic reforms and the need for a more coherent and forward-looking regulatory framework. According to him, the last edition of the FX manual was issued in 2018, making the latest review both timely and necessary.
Meanwhile, the cryptocurrency market plunged into the red zone as rising bond yields hit risk assets across markets, while traders are increasingly betting the Federal Reserve may need to raise rates again. Rising energy prices and resurging inflation could force central banks back into tightening mode.
Cardano (ADA) shrank by 4.4 per cent to $0.2557, Dogecoin (DOGE) slid by 3.7 per cent to $0.1104, Ripple (XRP) depreciated by 3.5 per cent to $1.41, Solana (SOL) crashed by 3.5 per cent to $87.81, and Binance Coin (BNB) slumped by 3.4 per cent to $659.64.
Further, Bitcoin (BTC) declined by 2.6 per cent to $78,547.49, Ethereum (ETH) lost 2.1 per cent to quote at $2,209.19, and TRON (TRX) tumbled by 0.7 per cent to $0.3509, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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