The 45th annual general meeting of the Association of Food, Beverage and Tobacco Employers (AFBTE) held in Lagos became a platform for serious discussions on the future of Nigeria’s critical food and beverage sector amidst ongoing economic challenges. Dr. Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), detailed the significant impacts of recent economic reforms on the sector, which is a vital part of Nigeria’s economy, contributing an average of 55% to the manufacturing Gross Domestic Product (GDP) and about N39 trillion to the national GDP in 2023, according to the National Bureau of Statistics (NBS).
Dr. Yusuf emphasized that while the food and beverage sector is pivotal for the nation, it has not been spared from the adverse effects of economic policies enacted by the current administration. These policies have introduced market shocks that affect all business sectors across the board— from micro to large enterprises, as well as the informal sector. The removal of subsidies on Premium Motor Spirit (PMS) and the liberalization of the Naira have led to a massive devaluation of the currency, escalating costs and eroding capital for businesses.
In response to these challenges, Dr. Yusuf proposed several measures to mitigate the impact on the food and beverage sector. Key among these is establishing a framework to manage foreign exchange market volatility, suggesting that the customs duty exchange rate should be pegged between N800 and N1000 per dollar. Additionally, he called for an end to the practice of dollarizing gas prices, which significantly increases operational costs for manufacturers.
Dr. Yusuf also recommended that the government provide concessional import duties on intermediate products essential for the sector and bolster development finance institutions to offer concessionary financing. He stressed the importance of enhancing internal security to strengthen the agricultural linkages essential for the food and beverage industry, which faces threats from adulteration and counterfeiting.
Echoing Dr. Yusuf’s concerns, Chinedum Okereke, President of AFBTE, painted a grim picture of the operating environment in 2023, which he described as tougher than previous years due to the government’s policy changes. The policy shifts have not only resulted in financial losses but also led to the withdrawal of foreign investments and the closure of longstanding multinational businesses in Nigeria.
Mr. Okereke highlighted the sector’s urgent needs, including more consistent regulatory measures at ports, alleviation of forex scarcity, and support for businesses grappling with the Naira’s devaluation. He advocated for the creation of additional free trade zones and enhanced support for export-oriented companies to ensure the continuity of businesses during these volatile times. Furthermore, he called for tax reforms that would allow businesses to deduct unrealised exchange losses, which could provide some relief from the financial strain caused by currency fluctuations.
The meeting underscored a broad consensus on the need for targeted government interventions to support the food and beverage sector, which is crucial not only for economic stability but also for national food security. Stakeholders urged the government to collaborate closely with the industry to combat the economic adversities exacerbated by the recent policy changes.
As Nigeria navigates these challenging economic waters, the outcomes of such interventions could be pivotal in stabilizing the food and beverage sector and by extension, mitigating the broader impacts of inflation on the Nigerian populace. The discussions at the AFBTE meeting highlighted the critical intersection of government policy and sectoral health, calling for a balanced approach that supports economic growth while safeguarding the interests of one of Nigeria’s most vital industries.
