Small business owners have decried the current N10 sugar levy which has compounded high inflation and insecurity that have driven at least 30 per cent of small and medium entrepreneurs out of business.
The sugar levy that is enforced by the Nigerian Customs Service (NCS), is charged to manufacturers per litre as another way to generate revenue for the federal government.
To pay the levy, manufacturers are also to pay an initial N2 million to an NCS-approved agent for a Personal Identification Number (PIN) through which the levy is remitted.
The levy, they said, has now joined inflation which quickened in Nigeria to 21.09 per cent in October from 20.77 percent in September, the highest reading since September 2005, largely due to a weaker currency that raised the cost of imported products. Insecurity has also played a role, pushing the prices of foods and other items up.
Speaking in an interview with LEADERSHIP, the president, National Association of Small-Scale Industrialists (NASSI), Peter Popoola said, the new tax is a killer punch to small-scale manufacturers.
He noted that, “the N2 million is the agent’s fee. They have approved agents that you must pass through. You can’t do it yourself, you must pass through the agent because it is somehow technical. If Customs is to stand by the rule as it is at the moment, all of us are gone, and no SME will remain. We will all shut down production.
“When putting up levy of this nature, common sense would have told them that they should not levy SMEs and Multinationals at the same rate. Multinationals can afford it with ease, but SMEs cannot at all.
you lump Coca-Cola, Nigerian Breweries, and Guinness together with the SMEs to be paying N10 per litre, where do they want us to get the money from?
“What SMEs need at present is a grant, so that they can sustain their staff, otherwise more people would be thrown into the alarming unemployment market. Another issue of concern is light, we can’t even afford to power our factory with the killing high rate of diesel.
“Apart from the issues I mentioned earlier, there is another bill at the National Assembly of which they are proposing 20 per cent of the cost of each bag. And when you add that to the N10 per litre, it becomes the excise duty that you will have to pay to the Nigerian Customs.”
Popoola noted that some small-scale manufacturers have closed shops due to the aggressive way Nigerian Customs officers are going after them
According to him, “all these problems the government is creating through such policies, we will all pay for it.
“I have told all of them that sitting down in their offices and calculating how they can increase revenue at the expense of industrialists would not do the economy any good. Rather, they are increasing unemployment, criminals, kidnappers insurgency, increasing inflation, etc.
“Now, prices of raw materials are never stable. In one year, we experience new prices every week. So how do we go about that.”
Complaining about the harsh business environment, he regretted that SMEs provide their infrastructure like boreholes, generators, and vehicles, adding that they face the worst problem when taking products to the market.
“To move your goods from the factory to the market, you will meet the police officers, Federal Road Safety, the Local Council, and area boys among others who are all after us for money.
“The government is just making production very difficult for us. They are making our business uncompetitive. We can’t compete in the African Continental Free Trade Area (AfCFTA). Chinese products are cheaper and this means that there is no way we can sell our products in Nigeria by the time these costs are applied to the selling price. The Chinese products that are produced at a cheaper cost will be cheaper in the market and this will rob us of buyers. We can’t continue like this.
“About 30 percent of our members have already shut down owing to the high inflation rate and we are now talking of additional levy and customs duty.” Popoola lamented.
Also, commenting, managing director of Stellarchem Nigeria Ltd, Ikpong Umoh, has lamented that the daunting challenges, including foreign exchange and energy crises, amongst others, are adversely impacting the critical role of Micro Small, and Medium Enterprises (MSMEs) in the nation’s economy.
He highlighted some of the challenges faced by MSMEs, noting that, electricity alone accounts for the biggest cost to operations in business in Nigeria, adding that, Forex availability is the other head of manufacturers’ nightmare.
He spoke at the 2022 edition of the annual workshop of the Commerce and Industry correspondents Association of Nigeria (CICAN), where he advised that, if MSMEs must survive the harsh terrain of doing business in the country, they have to think outside the box by adopting a variety of methods.
He also noted that Nigeria is unable to satisfy local demands for most manufactured goods due to the low productivity level in the sector, noting that, Nigeria continues to lose over $2 billion annually to pencil importation and keeping over 400,000 people unemployed.
According to him, “Stakeholders say that since the country began manufacturing pencil in 2019, policy formulation by the Federal government to encourage operators has been lacking, and as such, they have been unable to keep up the competition in the face of continuing pencil imports and the stifling operating environment.”
He urged the government to enact policies that will assist small businesses to grow the economy.