The Manufacturers Association of Nigeria (MAN) and the Distillers and Blenders Association of Nigeria (DIBAN) decried the recent ban on sachet alcoholic drinks and PET bottles less than 200ml by the National Agency for Food and Drug Administration (NAFDAC), saying it threatens to shut down over N800 billion worth of investments in the food and beverage subsector.
MAN and DIBAN disclosed this during a joint press conference in Lagos, on Friday. This is as labour laments that the harsh business operating environment is forcing companies in both public and private sectors to downsize, thereby, pushing more people into the already saturated Labour market.
To this end, stakeholders have warned the federal government to address the escalating inflated economy to avoid imminent job losses in the country.
The manufacturers and distillers associations urged the federal government to intervene and reverse the ban to save the possible loss of investments in machines, raw materials and financial resources and save 5.5 million direct and indirect persons jobs.
The associations noted that they are not fighting with NAFDAC but working to reach a common ground to address both the health and business concerns in the wine and spirits subsector.
Executive secretary of DIBAN, John Ichue, said the investors in this sector had invested over N800 billion and that the recent ban is a huge threat to the investment. He added that there are 5.5 million direct and indirect jobs that may also be in jeopardy if the ban by NAFDAC is allowed to stay.
He said some of the money invested in the sector by the investors was taken from commercial banks at high interest rates, adding that many of them have procured raw materials that would last them for the next four to five years.
The executive secretary noted that more than 25 companies in the wine and spirits sector in the country may be forced to close shop if the President did not intervene in reversing the ban.
Segun Ajayi-Kadir, director-general, Manufacturers Association of Nigeria (MAN) highlighted the extensive efforts by the industry to promote responsible drinking and address underage consumption, noting that sustaining the ban implies an excess of 5.5 million jobs is at risk of being lost.
“Over N1 billion has been spent on campaigns for responsible consumption. Banning these products doesn’t just affect businesses, it affects lives,” Ajayi-Kadir said in his speech.
The director general reiterated that to go ahead with the policy based on perceived danger, without empirical information and not minding the consequences is unfair to the industry operators, the thousands of workers that will lose their jobs, and inimical to the Nigerian economy.
Also, CEO of Intercontinental Distillers, Patrick Anegbe, said the association had always preached responsible drinking and had mounted media campaigns on radio andTV kicking against underage drinking alcoholic beverages in sachets.
He noted that the association is on the same page with NAFDAC, stating that the same objective could be achieved through access control rather than outright ban.
The chief executive officer noted that through the access control mechanism, “the underage will be safeguarded, businesses will remain and our members and suppliers in the value chains in the sector will retain their jobs.
“I also called on President Tinubu to intervene immediately; otherwise many jobs are on the line. Some of us investors have invested heavily in the sector.”
CEO of Grand oak industries, Wale Majolagbe, also echoed his colleagues in the industry, stating that the distilled wine and spirits has not been fingered as leading to deaths of anyone, but people had reportedly died from consuming undistilled drinks.
While he said that NAFDAC was not only insensitive to the hardship Nigerians are going through, she added that Mojisola Adeyeye, director-general of NAFDAC might be working in variance to President Tinubu’s Renewed Hope agenda by imposing this ban.
“What would happen to the investment that the manufacturers have made? The machines used for the production of these products cannot be used for other products. The President should rise and stop NAFDAC because the ban is not giving the government a good image.”
Noting that the country is sitting on time bomb and keg of gunpowder which can explode any moment, they also blamed some state governments who, in the name of labelling some areas as shanties, have been destroying means of livelihoods of those who try to survive without provision of better alternative for them.
It would be recalled that the International Labour Organisation (ILO), a few months ago, predicted that 2 million workers may lose their jobs this year, as the global unemployment rate will be up from 5.1 per cent in 2023 to 5.2 per cent before the end of the first quarter of this year 2024.
MAN said, the number of jobs lost in the manufacturing sector rose to the highest in three years for the first half of 2023.
In MAN’s latest half-yearly review report, the number increased by 108.7 per cent to 3,567 in H1 from 1,709 in the same period of 2022. It also grew by 31.7 per cent to 2,708 in H2 last year.
Already, five companies are exiting the country following their inability to cope with the tough operating environment, meaning that those working in these companies have their jobs at stake.
The American multinational consumer goods company, Procter & Gamble has announced plans to transform Nigeria into an import-focused market, ceasing its on-ground operations. This decision aligns with the actions of other multinationals like Unilever Nigeria (home care and skin cleansing division), GlaxoSmithKline, Sanofi, and Bolt Foods, all of which have cited the pursuit of an import-based model for business sustainability as their reason for leaving.
The departure of these companies is expected to have a profound impact on the Nigerian economy, with Procter & Gamble alone accounting for approximately 5,000 jobs. The exit of GlaxoSmithKline, with a market cap of N22 billion and over 400 highly technical workers, further exacerbates the situation. Unilever Nigeria’s exit, with a division worth N50 billion and 755 employees, adds to the growing concern.
President of MAN, Francis Meshioye, has attributed the exodus of these international manufacturing firms to factors such as the power crisis and the unpredictability of Nigeria’s foreign exchange rate. He emphasised that the high energy costs and other challenges have made it difficult for manufacturers to sustain their operations in Nigeria.
In a chat with LEADERSHIP, the general secretary of Federation of Informal Workers of Nigeria (FIWON), Comrade Gbenga Komolafe said, he wondered why rather than creating conducive business environment by uplifting small and medium-scale businesses, government of Lagos State and other states are pulling down houses and business places of people without provision of better alternative.
According to Komolafe, “it has been hell on earth in the past months based on Naira redesigned period hitherto. Just as some people and businesses were trying to start from scratch from the naira redesign, then came fuel subsidy removal which was like the last straw that broke the camel’s back.
“All these happened without any alternative for survival for small and micro businesses, based on an unbearable harsh business environment, that affected members in the informal sector, which is a mirror of the country’s economy over hundreds of small and micro businesses closed down with over million job losses.
“By this, the government is calling for anarchy when people can longer protest against bad governance by calling such protesters as being sponsored by opposition parties rather than finding a solution to their demands.”
In addition, Komolafe said: “The time bomb that will soon explode is because the masses who could not bottle up their grievances will burst into the streets just as it happened in Niger State a few days ago. Rather than addressing the demands, the government is calling them voices of opposition parties.”
Also, director-general of Lagos Chamber of Commerce & Industry (LCCI), Dr Chinyere Almona stated that, “in 2023, there has been a consistent increase in exit plans or a reduction in involvement in the Nigerian market by the multinationals, and this trend is worrisome. We have seen the likes of Unilever Nigeria, GlaxoSmithKline, and Guinness Nigeria Plc.
“In Nigeria, lingering foreign exchange scarcity, poor power supply, port congestion, multiple taxation, insecurity, and poor infrastructure, among others, have taken a toll on many businesses in the country.”
She noted the Chamber recommends that the government should implement measures to stabilise and ensure the availability of foreign exchange for businesses, particularly those operating in dollar-denominated environments, saying, the LCCI also implores the government to create a more flexible and transparent foreign exchange policy to address scarcity issues.
Almona urged the government to engage multinational corporations and the business community to understand their challenges and gather input and feedback on policy decisions to collaboratively develop solutions that will forestall the exodus of businesses from Nigeria, adding that, the Central Bank of Nigeria (CBN) should prioritise the stability of the country’s currency and adopt the right policy mix to ensure price stability.