Consumers To Pay More Duty On Manufactured Products


An economist and chief executive officer(CEO), of the Centre for Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf, has warned of the social and economic impact any further duty imposition on locally produced goods would have on consumers.

Yusuf gave the advice in response to a statement credited to the finance minister, Mrs Zainab Ahmed, who was quoted as saying, the government plans to impose excise duty on a range of manufactured goods in the country anytime soon.

He, therefore, advised the government to put on hold its planned imposition of excise duty on such goods.

Yusuf reminded the government that these are very difficult times for manufacturers as they contend with the escalating cost of production arising from elevated energy costs, rising operating expenses, sharp currency depreciation, forex market illiquidity, galloping inflation, and numerous structural bottlenecks.

To him, “they are also experiencing significant spikes in the cost of raw materials, cost of fund, high import duty, the prohibitive cost of transportation and high cost of logistics.

“A huge proportion of these costs cannot be passed on to the consumers because of weak purchasing power and high consumer resistance. Given the strategic importance of manufacturing to the Nigerian economy, what the sector needs at this time is more stimulus and not more taxes.”

He also informed that the cost of diesel has risen by close to 200 per cent in the past few weeks.

Diesel was sold for N288 per litre in January this year but had jumped to as high as N625 per litre in some locations while the cost of gas is similarly on the increase and there are also sharp increases in electricity tariffs.

According to him, several manufacturers are not able to import vital raw materials because of forex scarcity, a situation which is severely inhibiting their production and productivity, adding that, “many are forced to source forex from the parallel market at exorbitant rates. Manufacturers are yet to recover from the shocks of the pandemic and the subsequent recession.

“Manufacturing contribution to GDP is still less than ten percent.  The growth recorded in the sector in the fourth quarter of 2021 was a mere 2.28 per cent, after a contraction of 2.75 per cent in 2020.”

He stated further that manufacturers are struggling with unfair competition, especially, from products imported from Asia which have flooded the Nigerian market, largely because of the porosity of the borders and these imports are often much cheaper than goods produced locally.

He noted that the cost of logistics has continued to be on the upward trend, driven largely by the state of the roads, the limited freight capacity of the railway system, the crisis at the major ports, the traffic gridlock around the Lagos ports, and extortions in the logistics chain.

“The manufacturing sector offers good prospects for job creation and lifting more Nigerians out of poverty in line with the government aspirations. But if the burden of tax becomes excessive and unbearable on this critical sector the realization of these outcomes by the government would be difficult.” Yusuf added.

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