General

NLC wants policy review on locally produced alcohol, tobacco

The Nigeria Labour Congress, NLC, has described as laudable, efforts of government in increasing revenue and diversifying the economy but called for a policy review on locally produced alcohol, tobacco.

It said that though the effort was already yielding results, Federal Government's recent policy of a 500% increase in tariffs on locally produced alcohol, spirits and tobacco would be counter-productive.

He added that the policy would eventually lead to job losses and possible re-location of affected companies to neighboring African countries as was the case with Dunlop and Michelin.

In a letter to the Minister of Finance, Mrs Kemi Adeosun, NLC President, Ayuba Wabba drew the attention of the government to the complaints by one of its affiliate unions.

We write to draw your kind attention to a complaint registered on the above subject matter from one of our strong affiliates, the National Union of Food Beverage and Tobacco Employees (NUFBTE) which is worth giving special consideration.

This astronomical increase in tariff will lead to the following effects according to industry key players:

The policy would lead to huge price disparity between locally produced alcohol, tobacco and spirit and the ones produced outside Nigeria or imported.

It will also increase the cost of production and reduce profit margin.

It will also lead to the closure and possible relocation of those industries to neighboring countries within the West African sub region, Wabba said.

Pullout

He also drew the attention of the Minister to what he called the threat that the current hike in tariff on locally produced alcohol and tobacco poses to Nigeria's position as the choice investment destination in the food, and tobacco industry in Africa.

According to the NLC President: Currently, the British American Tobacco Company (BATC) has its largest manufacturing concerns in Nigeria and actually services other markets in the sub-region from Nigeria. The leadership of our union in the sector, NUFBTE, has been informed by manufacturers in the sector that they are seriously considering moving their businesses elsewhere if government goes ahead with the current hike in tariffs.

The BATC which retains its highest manufacturing presence in Nigeria is seriously considering moving out a significant portion of its production lines out of Nigeria to other African countries. Also, many distiller companies, and Guinness Breweries which invested billions in distilling have decided to divert investments running into billions of naira to other neighboring African countries.

Another reason the NLC is in favour of a review of the new tax policy, is the massive job losses and social backlashes caused by the pull out of Michelin and Dunlop manufacturing company from Nigeria to Ghana, years ago.

Wabba says Nigeria must do everything possible to avoid a re-occurrence.

Tax imports

He offered an alternative option: The Congress is therefore urging the Federal Government to quickly put in motion a procedure to meet and dialogue with key players in the industry to find the best balance; suspend the implementation of the policy, however laudable it is, to prevent the negative impact it will have on the economy, workers and Nigerians until after a proper consultation with key industry players.

We recommend that the proposed high tariff should actually only apply to imported spirits tobacco and alcohol to protect our local market and jobs.

The Federal Government should consider embarking on actions that will encourage and relieve the concerned manufacturing companies with incentives and tax waivers that will rather stimulate the sustainability of the affected companies instead of introducing policies that will further constitute obstacles and distraction to their profitable operation; The policy of the current government has been to encourage Nigerians to consume what we produce as a country.

This should be sustained. The Federal Government should increase its effort towards advocacy and control of the consumption of alcohol by emphasizing and focusing on aggressive campaign and sensitization of the populace on the health hazards inherent in consuming unregulated local wines and spirits instead of imposing this kind of tariff hike that would lead to factory closures, the letter said.

The Nigeria Labour Congress says that currently, the Food and Beverages sector employs more than 2 million workers with not less than forty million dependents.

It expressed concerns that if the government continues with this policy, millions of Nigerian families would lose their source of livelihood.

Source: Voice of Nigeria