The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Kadiri, on Tuesday, lamented the new excise duty regime for tobacco and alcoholic beverages which kicked off on Monday June 4 as earlier announced by the government.
The DG said it was regrettable that efforts made by MAN to prevent the implementation of the new excise duty rates on tobacco and alcoholic beverages did not yield the desired results, adding that the new excise duty regime is another factor likely to slow down the performance of the sector in the months ahead.
“We made representations to the ministry of finance, we made representations to the ministry of industry, trade and investment. We appealed to them, telling them the implication of the increase, we had dialogue with them, but all this was to no avail,” Kadiri said.
Explaining further, Kadiri remarked: “Most of the industries that operate in that sector are small and medium scale industries and their price-sensitivity is quite high. They also supply to the low end of the market segment, so this increase is going to negatively affect them and put them out of business. We also know that this government is committed to ease of doing business and promoting the growth of the sector. The argument that it is for health reasons does not arise. Those companies meet standards that are set by the relevant regulatory agencies and they practice and preach responsible consumption. Once there are laws regulating their production activities, it is presumptuous to adduce health reasons to the increase.”
He urged the government to reverse the increase in excise duty adding that government could drastically review rates downwards if it wants to increase revenue.
“Government should reverse the increase, there shouldn’t be any such increase. If because government is worried about the dwindling fortunes in terms of revenue which obviously is ramping up now, the price of crude in the international market is rising…if government wants to increase revenue, the rates should be reviewed downwards, drastically reviewed downwards. Government should also go into communication with the operators in the sub-sector (manufacturers of tobacco and alcoholic beverages) to do what is tolerable to the operators on a scientific basis. There have been studies to show the sensitivity of pricing in that sub-sector,” he said.
Similarly, the DG also reacted to the Central Bank of Nigeria’s Purchasing Managers’ Index (PMI) report on manufacturing, for the month of May, which stood at 56.5 index points and indicated expansion in the sector for the fourteenth consecutive month, albeit grew at a slower rate when compared to the index in the previous month.
Kadiri, who attributed the development to the lack of adequate power supply, which he said has hampered production activities in the sector, said it has become imperative for the government to address with sincerity of purpose, challenges bedeviling the sector. According to him, electricity distribution to the sector has not been at an optimal rate and has impacted the sector negatively, a situation which must be urgently salvaged if the sector must compete favourably with its counterparts in other economies of the world.
