By Victor Ahiuma-Young

The Association of Food, Beverage and Tobacco Employers, AFBTE, has raised alarm over the worsening operating environment in Nigeria, warning that rising production costs, weak consumer purchasing power, insecurity and excessive government charges are threatening the survival of businesses across the country.

The Association also called on the Federal Government to urgently introduce economic relief measures and incentives for manufacturers, while cautioning against policies capable of worsening business contraction and job losses.

AFBTE President, Mr. Chinedum Okereke, who spoke at the Association’s 47th Annual General Meeting, AGM, said although recent economic reforms had delivered some macroeconomic stability, businesses and ordinary Nigerians were yet to feel the real impact at the microeconomic level.

According to him, “Despite the noticeable gains and improvements recorded during the year under review, essentially arising from the reforms and particularly with respect to macro-economic stability, the economy and people still experienced some major challenges.

“One disturbing experience is the limited impact of the improvements recorded on the micro-economic front; more pointedly, its lack of positive effect on poverty reduction especially the general welfare and standard of living of the people.”

He noted that many companies were still struggling with high borrowing costs, foreign exchange pressures, poor infrastructure, insecurity and weak consumer demand.

According to him: “Another challenge was the high cost of borrowing which was also a major constraint to the unimpressive performance recorded.

“Furthermore, even though the exchange rate has reduced appreciably compared with the position in the past year, coupled with improvement in its availability, the cost of FX procurement is still considered very high.

“Also, the negative impact of the depreciation of the Naira in 2023 and its resultant effect on the cost of doing business and by extension, the profitability of our members, still remains a sore point.”

The AFBTE President lamented that insecurity in the North had continued to affect agricultural production and supply chains, thereby worsening logistics costs and raw material shortages for manufacturers.
He said: “The agriculture sector, critical to the business of a good number of our members, had their activities largely constrained by low productivity owing to the high level of insecurity in the Northern part of the country.

“The insecurity consistently resulted in our members not being able to have easy and speedy access to their needed raw materials for production and in like manner, market for the sale of their finished goods in addition to spiraling logistics cost.”

Okereke further stated that the rising cost of living had weakened the purchasing power of consumers, making it difficult for many Nigerians to afford basic products.

“Further to the above, was and still is, the inability of a growing chunk of the population to afford the finished products because of their high cost relative to the financial resources available to them as a result of the 2023 devaluation, which substantially diminished their purchasing power,” he added.

While acknowledging government reforms in the areas of foreign exchange management, tax administration and industrial policy, the Association insisted that more support was urgently needed for businesses to survive.

“At our AGM, we canvassed for the Government to, as a matter of urgency, put together what we referred to as ‘sweeteners’.

“The intention behind this request is for support to our member-companies who are groaning under the weight of very huge costs to run their businesses,” Okereke stated.

According to him, such incentives would encourage companies that remained in Nigeria despite harsh economic realities and could also attract investors that had earlier exited the country.

The Association also faulted the renewed move to ban the packaging and sale of alcoholic beverages in sachets and small PET bottles, warning that such a policy could lead to business contraction, revenue losses and job cuts.

“We have relentlessly drawn the attention of the Federal Government to the unwholesome and destructive implications of banning the packaging and sale of alcoholic beverages in sachets and small PET-bottles particularly as it relates to its effect on business contraction, loss of revenue and the loss of jobs.

“The industry has consistently clamoured for the decisions of Government and its Agencies at all levels, to be based on provable statistical data and empirical evidence.

“In line with this, we requested at various meetings for data in support of the reasons given regarding the ban issue, but unfortunately this was never provided,”he said.

Okereke urged the Federal Government to embrace evidence-based policymaking and sustained dialogue with the private sector in order to avoid policies capable of undermining industrial growth.

“We are using this medium to again appeal to the Federal Government to have a serious rethink on this issue,” he said.

The AFBTE President decried what he described as arbitrary taxes, levies and charges imposed on businesses without consultation.

“These financial burdens are not only too many and they have continued to increase, they are also patently arbitrary and outrageous. What is even more disturbing is the penchant for imposing these fees without any consultation with those who are required to pay them”, Mr Okereke noted

The AFBTE President appealed to governments at all levels to deepen dialogue with businesses and create a more conducive environment for investment, industrial expansion and job creation.