Alcohol Manufacturers Reject 500% Excise Duty Hike

  • Hike purely IMF agenda being camouflaged as health concern

Jonathan Eze

The Distillers and Blenders Association of Nigeria (DIBAN) has called on the federal government to halt the implementation of the new excise duty hike and hold genuine consultation with all stakeholders in the domestic wines and spirits space in order to prevent unemployment, as well as ensure the continued survival of the wine and spirits sector.

It added that the association rejected in totality the highly punitive and selective astronomical hike in duty, describing it as a purely International Monetary Fund (IMF) agenda being camouflaged as a health concern.

This was disclosed at the special media briefing by DIBAN and the Manufacturers Association of Nigeria (MAN) on the clarification of issues on and about excise duty on wines and spirits at the MAN House in Lagos.

Speaking at the briefing, the Chairman of DIBAN, Chief Patrick Anegbe, described the new astronomical hike in excise duty being imposed on the domestic wine and spirit industry as an attempt by the minister to foist an IMF sponsored agenda on Nigeria, saying it would further compound the hardship of already impoverished Nigerians.

The chairman explained that the new duty being approved for implementation by the Minister of Finance, translates to an increase in duty from current average of N30 per litre to N150 per litre in the first year and N200 per litre subsequently.
Patrick further added that this translates to an increase from current average duty of N270 to N1350 per case (carton) in the first year and N270 to N1800 per case (carton) from second year.

“We are particularly worried that the jobs of over 25,000 Nigerians plus over 250,000 connected SMEs staffs are being threatened by this hike. If the implementation of the new duty hike is allowed to proceed, we are worried about the obvious job losses that will result from low demand of our products.”

Patrick also expressed concern that the new hike in duty would lead to the collapse of the indigenous wines and spirits segment, adding that it will pave way for the complete takeover of the Nigerian wines and spirits market by the imported and smuggled brands.

“We are also disturbed that the new hike will not only affect the wine and spirit industry but also other key sectors of the economy and businesses such as packaging industries, bottles, cartons, labels, cork, laminates, glue, Ink, printing, laboratory, marketing, consulting, media, to mention but a few.

“We are particularly worried that our industry investment of over N420 billion is being threatened by the recent upward review of excise duties on locally produced wines and spirits. We strongly hold the view that if the intention of government is to grow local industries, imposing exorbitant duties on locally manufactured goods is a contradiction of that objective.”

Anegbe countered the position of the Finance Minister, Mrs. Kemi Adeosun, that the excise duty increase has to do with the health of consumers, saying the increase will lead to many local manufacturers closing shop giving room to imported and smuggled brands.
Speaking also, the Director-General, MAN, Mr. Segun Ajayi, said it was a wrong timing on the part of the federal government to increase the consumption tax without making reference to the prevailing economic conditions in the country.

“The rate is astronomical. This means that there will be 545 per cent on a product that is majorly consumed by the people at the low-end of the market. What you have is raising the hands of the foreign brands. We need to be very strategic because it is a trade issue”.
“If you increase the excise duty because you want to guarantee the health safety of the consumers, you might be doing this in the other way round”.

He therefore, appealed to federal government for reconsideration, saying the market place is a competition between foreign and local brands and that the consumers will bear the brunt at the long run.

On whether there was a consultation with MAN before the hike in excise duty, the DG said: “We had some form of consultation especially at the level of MAN but it is one thing to make representation and it is another thing for the government to act.”