Due to double taxation and increase of excise duty, owners of factories in the food and beverage sector are considering relocating their factories to other countries in Africa.
Double taxation and increase of excise duty on carbonated drinks by the Federal Government of Nigeria, is currently affecting cost of production and thereby causing employers of labour in the food and beverage sector to have a rethink of doing business in the country.
The employers, have requested that Federal Government reconsiders its economic policy and actions to rescue the business environment from collapsing, as doing business in Nigeria has become extremely difficult.
Making known their worries, they have notified the government of their next line of action, towards relocating their factories to neighbouring countries, where production cost is cheaper and as the only alternative option for them to remain in business. And as such, the finished products will be brought back to Nigeria to sell, making Nigeria to be at the receiving end.
This development came about when workers under the auspices of the National Union of Food Beverage and Tobacco Employees (NUFBTE), revealing the employers’ plans in separate letters to the Speaker, House of Representatives, Femi Gbajabiamila; Minister of Labour and Employment, Chris Ngige, and President, Nigeria Labour Congress (NLC), Ayuba Wabba, titled, ‘Federal Government Save Our Soul, Food Sector is Dying because of Multiple Excise Duty /Taxation’.
Doing business has been very difficult since January this year till date, after the introduction of the excise duty , said the Union.
In a letters signed by President of NUFBTE, Lateef Oyelekan, the Union called on the Federal Government to save the sector from extinction as the 10 per cent excise duty placed on carbonated drinks and excess taxation has made employers to reduce their work force drastically -laying off over 5,000 employees.
The President of Union said the facts of their complain speaks for themselves and are verifiable – on ground at the factory by the stationed Customs officers .
He said that increase in the prices of products as a resulting of the issues raised have caused stagnation in the market and huge losses to companies, due to product expiration dates as a result of poor sales.
He said: “The life span of finished products (FCMG) is six month. Over billions of products have expired and will be discarded because of the price increase of the finished products.
“Billions of naira raw materials of the products will be expiring in December and January. The production of goods daily that was formerly 12 hours per day, six days a week (Monday to Saturday) has now reduced to eight hours per day and three times a week.
“Companies that have six production lines have shut three lines down and most companies are now left with three lines to produce due to the excess percentage on excise duty and taxation. Companies are struggling to produce.”
The letter read further, “Having said that, in the past years companies like Nigeria Bottling Company, Nigeria Breweries Limited, Nestle, Seven Up Bottling Company, International Breweries, Nigeria Flour Mills to mention a few engaged Technical school holders, GCE holders, OND holders, HND holders and train them in the company’s technical training college for a year, after which they were employed. This is not the case again in recent times.
“Furthermore, each of the aforementioned companies employed close to 1000 workers in the past years, but sadly this exercise has stopped in the past two years due to the outrageous excise duty and taxation affecting the sector.”
