MAN implore Government not to increase the VAT at this point in time

The Director General (DG) of the Manufacturers Association of Nigeria (MAN) said the attention of Association has been drawn to news report on the recent recommendation of the Federal Ministry of Finance to the effect that the VAT rate be increased by 50%. According to reports, this recommendation was ventilated through pronouncement and commentary made on the floor of the Senate by key officials of the Government while defending the Medium-Term Expenditure Framework (MTEF). Although, this commentary has been denied in a signed statement by Wahab Gbadamosi Director Communication and Servicom as published in some National dallies, the Association still wishes to warn that if such commentary is anything to go by, it should be on record that such policy is not manufacturing friendly as the proposed VAT increase appears not to have taken into cognizance the prevailing times and the ongoing Government efforts to re-invigorate the economy.

In the press statement endorsed by the director general of MAN, Segun Ajayi-Kadir tagged “The position of the manufacturers association of Nigeria (man) on the reported possible increase in value added tax (VAT) rate by the federal government of Nigeria” said MAN hereby implore Government not to increase the VAT at this point in time but consider the implementation of the afore-mentioned tax specific recommendations and continue to ramp-up support for the manufacturing sector in the best interest of the over 200million Nigeria.

ALSO READ: Mines and Steel Development adopts 17 steps of reforms and developed strategies to fulfill its mandate says Minister

He said as plausible as the recommendation to increase VAT may look, implementing it at this time would boomerang because the timing is inappropriate, especially at a time when the minimum wage of N30,000 was just agreed upon. This could send a wrong signal that the Government is not sensitive to the plight of the low- and middle-income earners, who are clearly in the majority. A typical case of Government simply taking back what was given with the right hand through the National Minimum Wage with the left hand through 50% increase in VAT, added he.

 

The MAN DG said that In terms of misery index rating, low per capita income, heavily lopsided income distribution pattern, the Nigerian economy will be in a more vulnerable state if VAT is increased. No controversy, the burden of the tax would be shifted to the Nigerian consumers that are already struggling, the economy would certainly experience demand crunch, inventory of unsold items would soar, profitability of manufacturing concerns would be negatively impacted, many factories will witness serious downturn or wind down operations.

 

“This would also worsen the already high unemployment position of the country which is above 23% as Nigerians currently employed by manufacturing concerns and other businesses may join the reserved army of unemployed and further bloat the unemployment rate in the country.

MAN as a strategic stakeholder in the nation’s development agenda, appreciates the need for Government to generate more revenue to fund its developmental initiatives amidst declining revenue from oil. However, Government should thread with caution in the drive for improved revenue for the following reasons:

The economy just recently exited recession with the fragile growth rate of less than 2% recorded in 2018 and should be delicately managed.

The precarious macroeconomic condition of the country requires palliatives that would improve investment and not higher tax burden

The prevailing high lending rate, double digit inflation, low per capita income, high unemployment rate and a low 1.91% growth rate amidst 2.6% population growth rate that are already cumulatively limiting competitiveness could be further worsened.

Any increase at this time would not be in sync with the standard practice that expects the administration and implementation of VAT to be effected in a manner that distortion and possible adverse effect on the economy are minimized or avoided.

An increased VAT will spur spontaneous increase in inflation rate occasioned by increased prices of goods and services

The obvious resultant effects of implementing an increased VAT on the manufacturing sector includes lower purchasing power of consumers, sharp reduction in consumption, drop in sales, decrease in production capacity, lower Government revenue, increase in unemployment and stifled economic growth.

Unfair comparison of VAT rate in Nigeria and other countries in Africa forgetting the fact that macroeconomic dynamics and the level of competitiveness in these countries are not the same with that of Nigeria.

The fact that many States of the federation also have other consumption taxes like VAT currently being levied on businesses should call for circumspection

 

MAN pointed out that “In terms of misery index rating, low per capita income, heavily lopsided income distribution pattern, the Nigerian economy will be in a more vulnerable state if VAT is increased. No controversy, the burden of the tax would be shifted to the Nigerian consumers that are already struggling, the economy would certainly experience demand crunch, inventory of unsold items would soar, profitability of manufacturing concerns would be negatively impacted, many factories will witness serious downturn or wind down operations.

 

The MAN DG said this would also worsen the already high unemployment position of the country which is above 23% as Nigerians currently employed by manufacturing concerns and other businesses may join the reserved army of unemployed and further bloat the unemployment rate in the country.

It was recall that MAN’s previous position and recommendations, the Association advised Government to widen the tax net rather than increasing the rate to meet the growing need for more revenue to address the development objective of the country. There is also the need to harmonize taxes/levies/fees payable by businesses in the country so as to attract more investment that would translate to higher productivity and more tax revenue for the Government in the medium and long term.

 

The Caption Photo: the director general of MAN, Segun Ajayi-Kadir

 

Mines and Steel Development adopts 17 steps of reforms and developed strategies to fulfill its mandate says Minister

The Honourable, Minister of Mines and Steel Development, Abubakar BawaBwari, in his speech delivered at the Nigerian Manufacturers Exhibition (nme)-2019 holding at the landmark center, Victoria Island, Lagos last week noted that It is a great pleasure to be given the opportunity to speak to this august gathering on the occasion of the Manufacturers Association organized Nigerian Manufacturers Exhibition NME-2019 with the theme “Optimizing the Value Chain towards the Growth and Competitiveness in the Manufacturing Sector”.

Minister-of-State-for-Mines-and-Steel-Development-Hon.-Abubakar-Bawa-Bwari

He disclosed that the Ministry of Mines and Steel Development in an effort to implement its mandates has undertaken far reaching reforms and developed strategies to fulfill this mandate and has achieved the following;

  • Developed a Roadmap for the Growth and Development of the Nigerian Industry;
  • Addressed the issue of low funding through the N30 Billion Intervention Fund meant for Exploration to enable sectorial growth;
  • Secured World Bank loan of $150 Million for MinDiverProgramme;
  • Contribution to GDP has improved from 0.03% to 0.6% in 2016;
  • Revenue Generation improved from N2.08 Billion in 2015 to N3.92 Billion in 2017 and N2.97 Billion as at October, 2018;
  • The Mining Cadastral Office recorded Limestone as highest Royalty Payments of N5.2 Billion through Processing Fees and other Licensing Fees;
  • Retrieved the old Geological Data of Aeromagnetic Survey Data of the Country from Fugro which Nigerian Geological Survey Agency is already using to explore for strategic minerals;
  • Phosphate exploration project ongoing in Sokoto State with support from OCP of Morocco;
  • Carried out an inventory of the Carbonates Resources of Nigeria in conjunction with Cement Technology Institute (CTI);
  • Facilitated the Development of an Industrial Minerals Roadmap;
  • Facilitated the Integrated Exploration Programme to address the issue of scare Geoscience Data to aid mining investments decision on Gold, Lead, Zinc, Iron Ore and Rare Metals;
  • Strengthening of Ease of Doing Business and Address of Perception Issues by establishing the Investment Promotion and Mineral Trade (IPMT) Department;
  • Addressing the Lapses in Mineral Exports documentation – reducing processing time;
  • Collaborating with Federal Ministry of Finance (FMF) to develop Mineral Export Guidelines;
  • Addressing the lapses in Mineral Title Administration of the Mining Cadastral Office;
  • Addressing Health and Safety Issues as well as promoting Federal – State Governments Cooperation;
  • Addressing the issue of funding for Operators in the sector through collaboration with the Bank of Industry;

BawaBwari pointed out that “the Manufacturers Association of Nigeria (MAN), being a foremost and elite organized private sector Body has demonstrated sterling competencies and uncommon resilience in the face of daunting challenges confronting the manufacturing sector in Nigeria

“The Mining Sector having been identified as a sector that will help reposition and facilitate Government’s diversification efforts and source of additional revenue, has placed a great demand on the Ministry of Mines & Steel Development (MMSD). This was clearly conveyed by President Muhammadu Buhari to the Ministers during the appointment of Dr. Kayode Fayemi and Hon. Abubakar BawaBwari as Minister and Minister of State for Mines and Steel Development with clear mandate to increase the revenue generation from the sector, broaden the sector’s capacity to create jobs, and implement policies that will engender sustainable mining

 

The minister said “the subject of optimizing the Value Chain of the Manufacturing Sector to enhance growth and global competitiveness of Nigeria is the theme for this gathering. We have come to realization that no industry or sector operates in isolation and therefore every manufacturer correspondingly has to ensure that his products and services add to the value chain of the product line to achieve national growth and global competitiveness, added he.

“Nigeria at the moment has many isolated products that need to be inter-linked with its up-stream and or down-stream products and services. I am sure that Value Chain concept does not need a definition to this audience but necessarily have to state that the strategic linkages of the products and services of the various sectors of the nation’s economy would define speed of accomplishment of national goals.”

Oyeyimika Adeboye To Head Cadbury Nigeria As new Managing Director

——while Ogaga Ologe takes over Finance Director

 

The Management of the Cadbury Nigeria Plc on Tuesday announced the appointment of Mrs Oyeyimika Adeboye as the company’s new Managing Director effective 1st April 2019. Mrs Adeboye takes over from Mr Amir Shamsi, who will take on a new role within Mondelēz International, the parent company of Cadbury Nigeria.

Mrs Adeboye would be the first female Managing Director in Cadbury Nigeria history. Her appointment attests to the Company’s commitment to promoting gender equality, diversity and inclusion.

Mrs Adeboye, a chartered accountant, joined the Board of Cadbury Nigeria as Finance and Strategy Director, West Africa region in November 2008.

Prior to joining Cadbury Nigeria, Mrs Adeboye was the Director of Finance and Chief Financial Officer of Nigerian Bottling Company Plc. She previously worked for the erstwhile Accounting and Tax Practice of Arthur Andersen & Co as well as the United Kingdom Accounting practice of Midgley Snelling & Co., Chartered Accountants.

Mrs Adeboye has an impressive track record in finance, strategy and business administration both in Nigeria and the United Kingdom. She is a fellow of the Institute of Chartered Accountants in England and Wales and a member of the Institute of Chartered Accountants in Nigeria. Mrs Adeboye has a Bachelor of Science honours degree in Economics and Social Studies from the University College Cardiff, Wales and executive management education certification from the Institute of Management Development (IMD), Lausanne, Switzerland.

Ogaga Ologe

Mr Ogaga Ologe, who is the Company’s Financial Controller, has been appointed as the new Finance Director effective 1st April 2019. Mr Ologe, who succeeds Mrs Adeboye, joined Cadbury Nigeria in 2012, from KPMG Professional Services where he led the audit of the financial statements for many multinationals.

He holds a Bachelor of Science honours degree in Physics from Delta State University, Abraka. He is a qualified Chartered Accountant from the Institute of Chartered Accountants in Nigeria (ICAN)

Meanwhile in the Cadbury Nigeria Plc corporate financial performance report as welcome to the new managing director as first female to reached the position with a net earnings growth of 174% in 2018. Profit skyrocketed to ₦823m from ₦300m in 2017. The leap in profit was helped by a 9% sales growth to ₦35.9 from ₦33bn, with its flagship Bournvita and 3-in-1 Hot Chocolate, which contributed 59% of Group sales recording 17.55% sales increase.

Net profit also received a boost from cost management initiatives, with Selling & Distribution expenses dropping 10% and administrative expenses declining marginally by 1.46%.

The company said that Intermediate Cocoa Products which includes cocoa powder, cocoa butter, cocoa liquor and cocoa cake, (contributing 14% of Group sales) grew by 9% in the period, helping lift sales. However, the confectionary products (Tom Tom, Buttermint, Clorets and Trident) which contributed 27% of Group sales declined by 7%.

Airtel opens discussion on NSE listing

There were indications that the Airtel Nigeria may have opened discussion with the Nigerian Communications Commission and the Nigerian Stock Exchange on the listing of its stock on the Nigerian Stock Exchange.

A meeting held at the headquarters of the Nigerian Communications Commission in Abuja on Wednesday had the henchmen from the three organisations in attendance.

These included the Managing Director/Chief Executive Officer, Bharti Airtel Africa, Raghunath Mandava; Managing Director, Airtel Nigeria, Segun Ogunsanya; Chief Executive Officer, Nigerian Stock Exchange, Mr Oscar Onyema; and the Executive Vice Chairman, NCC, Prof Umar Danbatta.

It was also learnt that two top officials of Stanbic IBTC attended the meeting. The Security and Exchange Commission was also represented at the meeting. Stanbic IBTC Holdings Limited is registered with SEC as an Issuing House and an underwriter. It provides investment banking services to corporate clients.

Our correspondent learnt that Airtel could be pursuing listing in the Nigeria Stock Exchange in response to one of its major competitors in the Nigerian market, MTN Nigeria, which had indicated that it would pursue listing in the market by introduction within the first half of the year.

There is also a bill that seeks to compel operators in the Nigeria telecommunications market to list in the Nigerian Stock Exchange.

Experts see listing as a means by which telecommunications operators can pursue expansion, share their risks with Nigerian investors, dilute ownership and use the proceeds to invest in other markets or sectors.

Briefing the press before entering a closed session with NSE, Airtel, Stanbic IBTC and SEC executives, Danbatta told journalists that the regulatory agency was happy with the expansion programme of Airtel as well as the broadband penetration occasioned by Airtel and other operators.

He said, “It is good to see Airtel providing services, especially 4G services. It is good to hear the level of expansion because we are seeing remarkable improvement in broadband penetration.

“The figures are increasingly going up. We are at about 33 per cent now. This we can attribute to very ambitious expansion of network operators like Airtel in places like Lagos, Kano, Rivers, Ibadan and Abuja. This lends credence to figures we are seeing from broadband penetration.

“We are seeing increase in broadband subscription, especially to services provided by Airtel. It is good for Nigerians to hear that Airtel is helping us to hit the broadband penetration target. All parameters are steadily growing courtesy of expansion programme of 4G operators in the country, especially Airtel.”

Mandava, the Airtel Africa boss, described Nigeria as the fastest growing market and also the biggest market the company has in Africa.

He said, “It (Nigeria) is a critical market for us as we expand broadband penetration. We are impressed about the way Nigerian telecom market is growing.  This is the fastest growing market in Africa.

“We are committed to very heavy investment and to help digitise the country. We are here to thank them for their support and to discuss about future broadband.”

The NSE boss was, however, shielded from making any comment.

Dangote Refinery to empower youths in host communities

Dangote Petroleum Refinery & Petrochemicals Company has inaugurated a vocational training scheme that will instill necessary skills in young men and women from the Ibeju-Lekki area of its operation.

The company said the initiative was part of efforts aimed at making youths from its host communities employable.

The Executive Director, Capital Projects, Dangote Group, Mr Devakumar Edwin, described the initiative as a demonstration of Dangote Refinery’s commitment towards capacity building and youth empowerment in the country.

The programme, which was launched in collaboration with the National Directorate of Employment  and the Nigerian Content Development and Monitoring Board on Wednesday, was designed to cover plumbing, masonry, welding, iron bending, auto mechanics and electrical works.

Edwin said the scheme was geared towards instant value addition to the lives of the youths and their communities as they would be equipped with trade skills that would prepare them for better opportunities.

At a ceremony, which was attended by traditional rulers and community leaders, including the Oba of Lagos, Rilwan Akiolu, the Dangote Group boss said the company would continue to invest in projects that would add value to the lives of the people in the communities hosting its facilities across the country.

He said, “At Dangote Industries Limited, our Corporate Social Responsibility projects are centred around the development and wellbeing of the people, especially our host communities. In Ibeju Lekki, we have executed several projects that are enhancing the lives of the people. We have provided boreholes for all the communities, blocks of classrooms for the local schools, and we just awarded scholarships to 51 secondary school students.

“This programme is another level of our intervention as it is targetted at providing vocational skills to the teeming youth population in our host communities. The youths are veritable assets in any society and the quality of the youths determines the outlook of tomorrow’s society. Therefore, an investment in developing vocational skills among the youths will yield the desired results.”

The Executive Secretary, NCDMB, Mr Simbi Wabote, commended Dangote Refinery on its achievement, saying the Nigerian content was geared towards promoting domiciliation of value-adding activities and utilisation of Nigerian human and material resources.

AMCON seeks reintroduction of Failed Bank Act

Worried by the resurgent huge toxic loans in the banking sector, the Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria, Mr Ahmed Kuru, on Wednesday, called on the Nigerian authorities to revisit the Failed Bank Act so that operatives in the banking sector would be made to account for their actions.

Kuru made the call when officials of Risk Management Association of Nigeria paid a visit to AMCON’s Lagos office.

In a statement, he urged banks to immediately strengthened their risk management framework to stem the negative growth.

He said the reintroduction of the Failed Bank Act into the country’s financial system would not only curtail the current trend of financial rascality on the part of some bankers, but would bring discipline to the banking industry in general.

Having been privileged to have been on both sides of the divide – as a banker and now on the regulatory side, Kuru explained that given the huge resources that were available to financial institutions and the pivotal role they played in the development of the economy, it made it mandatory for them to take the issues of risk management seriously to prevent what happened during the global financial crisis.

He suggested that in line with the fight against corruption, there was also a need to fight against impaired and arranged credits so that operators were held responsible for booking credits contrary to their credit policy that went bad under their supervision.

He reiterated that one of the reasons for the failure of the banking system during the global financial crisis of 2008/2009, which eventually led to the creation of AMCON was because of the prevalence of weak risk management framework by financial institutions.

He added that the trend became a baggage, which contained all sorts of bad omen for the economy including poor corporate governance structure, lack of robust risk management strategy and adherence to laid down principles that governed credit approvals by financial institutions.

He stated, “I have been on both sides, therefore, I can authoritatively comment on issues relating to risk management. Immediately after the intervention of the Central Bank of Nigeria in 2009, they insisted that risk management must be given prominence right from the board level to the account officer.”