The Manufacturers Association of Nigeria has said that the recent increase in excise duty for beverage and tobacco goods will force businesses to scale down operations, which will result in factory closures, job losses, a decline in exports among others.
MAN President, Francis Meshioye, stated this on Tuesday during a press conference held in Lagos to raise objections on the recently published 2023 Fiscal Policy Measures.
Noting that the excise duty hike is a flagrant reneging of a promise made to the association by the Federal Government, through the Ministry of Finance, Budget and National Planning on March 23, 2023, he said 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 an increase’, since there was already an approved increase in place for 2023.
Meshioye said the increase was coming at a time when the manufacturing sector was immersed in unprecedented crisis and an acute recession, due to extraordinary challenges, namely sustained scarcity of naira, limited access to foreign exchange, high inflation and a struggling economy.
According to Meshioye, the brewing sector, which would bear the brunt of the excise duty hike suffered a massive decline of -169 per cent in profit before tax in Q1 2023.
He added that 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.
Meshioye said, “The manufacturing sector has been struggling with crashing sales, mainly attributable to the sustained naira scarcity. 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.’’