By Bimbola Oyesola
The Nigeria Employers’ Consultative Association (NECA) has warned that the planned re-introduction of excise duty on carbonated drinks will be counter-productive, as it will lead to further stifling of businesses in the manufacturing industry.
The association, which is the umbrella body of all employers’ groups, maintained that it will result in reduction of the purchasing power of the masses as any increase in price will be passed to the consumers.
“NECA has also noted the contents of both the 2022 Appropriation Act (Budget) and Finance Act 2021 and wish to draw the attention of government and Nigerians to some areas that could lead to challenges – increased number of industrial actions, job losses and rising unemployment,” the statement from NECA said.
Noticeable among the concerns of the organised private sector is the planned reintroduction of tax on carbonated drinks.
The association recalled that, in 2009, during the global financial crisis, Excise duties on carbonated drinks were suspended to aid the sustainability of businesses: “We make bold to say that the economic situation which necessitated the suspension of the excise in 2009 has not abated, but is, rather, worse. In fact, businesses currently face greater hardship than what obtained in 2009.
“Globally, at a time like this, governments continue to provide incentives for industries in order to speed up recovery from the shocks of COVID-19 pandemic, inflation and escalating costs. Nigeria cannot afford to be doing the exact opposite as manufacturers, across all product segments, need a respite, especially in the light of the unprecedented increase in production and operating costs.”
NECA lamented that manufacturers in the country have been contending with the dislocations caused by the pandemic and the recession that followed.
It stated, “They are also facing serious crisis resulting from liquidity challenges in the foreign exchange market, which is impacting adversely on the cost of production, sales, turnover, profitability and shareholder value. In addition, they are confronted with intense pressure arising from numerous structural bottlenecks that are creating sustainability challenges for investors, especially those in the SME segment. Furthermore, there are concerns with the significant spike in cost of raw materials, investment capital, high import duty, energy, transportation and logistics/shipping among others.”
It noted that government, in the interest of Nigerians and the economy, should suspend the reintroduction of excise duty on carbonated drinks and continue to support and promote the industry to attain full recovery after the onslaught of the pandemic, and position it to further accommodate the teeming unemployed Nigerians, particularly the youths.
It added further, “Secondly, the organized private sector in Nigeria is clamouring for business environment that will be agile, less bureaucratic and cost-effective to support general business operation, with the quest that the Private Sector would support the National Development Plan (2021-2025) with about N298.3 trillion and lift up over 30 million Nigerians out of the poverty lines through creation of decent jobs over the period.
“It should be noted that, the private sector has the potential to achieve the set target, however, there is need to treasure and nourish the bird that lays the golden egg, by providing the enabling business environment for businesses to thrive.
“A further hike in value added tax (VAT) would only increase the revenue of Government temporarily, as this would further translate to reduction in consumption for some items, loss of jobs to workers in the production value chains of those items as well as negatively impact overall Government revenue projections. etc.”
NECA said it aligned its thoughts with the aspiration of the current administration in the removal of fuel subsidy, as the current subsidy regime is not sustainable, with the subsidy payment hovering around N150billion monthly and around N2trillion annually, stating that with the removal of subsidy, the funds that would be saved could help address the wide infrastructural deficits and other gap in the country.