Food and Beverage sector urge government to implement policies favourable to manufacturing

Companies operating in the food and beverage sector, under the aegis of the Association of Food, Beverage and Tobacco Employers (AFBTE) have called on the Federal Government to pass laws that will encourage manufacturing in the country.

The call was made by Mr Patrick Anegbe, the President of AFBTE, who also serves as the Managing Director of Intercontinental Distillers Limited, at the Association’s Annual General Meeting held in Lagos over the weekend.

Listing out policy changes by different ministries and agencies of government over the course of the last year which has had an adverse impact on the ease of doing business, Anegbe said: “the upward review of excise duty on alcohol, beverages and tobacco products, the proposed implementation of the Transfer Pricing Regulations, the planned ban on production of alcohol beverages in sachets and small size pet bottles, the demand by the national regulatory commission for payment in respect of sales promotion organised by companies under the guise that it is lottery, just to mention but a few. All of these threatened the existence of some businesses in our industry.”

In addition, he lamented the influx of imported finished products which was driving member companies out of business.

He noted that multiple taxation and high cost of logistics was harming the industry.

He said that the sector declined by 7% in pre-tax profit due in part to the slow pace of a recovery in the economy, delay in passage of the 2018 budget and insecurity in some parts of the country, which constrained business operations in the area.

“There was also the issue of contraction in yield from Federal Government debt instruments, which affected accessibility to funds from the banks,” he said.

On infrastructure, Anegbe stated that the recurring issue of infrastructural decay was still evident, as many businesses struggled to survive in the year. He added that government’s effort at the federal and State levels in this critical area was not too impactful.

Commenting further, he said that the association would continue to engage, interact and collaborate with various government agencies that regulate the industry, adding that it will go a long way to ensuring that the industry and member-companies understand their expectations, policies and thinking.

“The government now more than ever should enact, implement and enforce policies as well as regulations aimed at encouraging manufacturers and the issues of multiple taxes and cross functional activities of the agencies needs to be addressed as these affects the players in the industry.

“Some state legislations and regulation were of concern in the year. These included Lagos state government’s increase in Land Use Charge, Ogun and Lagos state Water Abstraction charges and multiple tax imposition, among others, and the result is that some members carried-out redundancy exercises while some increased third party provided resources,” he said.

Anegbe noted that the second tranche of the 2017 signed collective agreement on salaries/wages, allowance/fringe benefits for junior and senior employee in the industry, was implemented in October and December respectively.

‘‘Our industry’s extant collective agreements on salaries/wages, allowance/fringe benefits with National Union of Food, Beverage and Tobacco Employees(NUFBTE) and Food, Beverage and Tobacco Senior Staff Association(FOBTOB) will be due for renewal this year.”

Also speaking at the event, Bismark Rawane, who was the guest speaker as well as Managing Director of Financial Derivatives Company Limited, said that despite Nigeria coming out of recession in 2017, food inflation was still responsible for the overall inflation rate.

Highlighting some of the factors that could affect disposable income in 2019, Rawane listed subsidy, exchange rate, oil prices and telecommunication, while reiterating that cost of Logistics and low investment in road has effect in the overall delivery of goods in the country.

He urged the food and beverage sector to push for effective management of financial system and laws that promote ease of doing business in the country considering the rate of unemployment in the country, which according to him affects sales.

The Consumer Price Index (CPI), which measures inflation, has risen to 11.37% in April, after monthly declines since January. According to the National Bureau of Statistics (NBS), food inflation rose to 13.70% in April, from 13.45% in the prior month.

Updated: 20 May, 2019 at 6:42PM

Leave a Reply

Your email address will not be published. Required fields are marked *