Author: The Nation

Africa, with its diverse cultures and people, has much to offer the world of work. In addition, the agility, resilience, and creativity of Africans, as well as their appetite to contribute to the global economy, make them the perfect choice for businesses looking to grow and expand their services on the continent and further afield.

This was the view of human resources experts at the recent panel discussion of Mondelçz International (parent company of Cadbury Nigeria Plc), and Top Employers’ Institute. Both Mondelçz South Africa and Cadbury Nigeria are certified as Top Employers in Africa.

Speaking at the event, Njabulo Mashigo, Human Resources Director of Vodacom South Africa, said Africa’s demographic dividend and diversity is key to developing a global talent pool for the future.

Mashigo added: “Africa’s demographic dividend places it at an advantage. With a massive pool of diverse and talented young people, businesses are spoilt for choice when it comes to selecting and developing the leaders of tomorrow. “Corporates, governments and educational institutions need to work collaboratively to develop the skills needed to take the continent forward.”

Keshnie Martin, Head of Human Resources at Accenture, Africa agreed stating that “Young talent in Africa exists. It just needs opportunities and investment to flourish.”

In addition, Martin said Africa’s diversity affords it a competitive edge in respect of the global economy.

“Not only is the continent developing pockets of technological excellence and innovation, but its agricultural capital has the potential to help address food insecurity worldwide,” said Cebile Xulu, People Lead, Sub-Saharan Africa at Mondelçz International.

Sadly, much of Africa’s talent leaves the continent to pursue opportunities elsewhere. The reasons for this vary, from safety and security concerns to political instability, and better prospects for education elsewhere. Many do, however, make their  

Despite the economic crunch, the business outlook of GlaxoSmithkline Consumer Nigeria Plc seems promising as the drug manufacturer recorded modest success as reflected in its financial position in its year-end report.

While addressing shareholders of the company at its 52nd annual general meeting last Wednesday, Mr Edmund Onuzo, the Chairman, noted that the outstanding results recorded at the end of the business year was a testament to its tenacity and resilience in pushing through challenges.

Specifically, he said, the company’s revenue grew by 13% to N25.38 billion from N22.45 billion in 2021, while the cost of sales increased by 13% to N18.45 billion from N16.27 billion just as the company’s profit after tax for 2022 increased by 17% to N771.15 million compared to N658.81 million reported in 2021.

“Despite the challenging terrain, the increase in Profit After Tax) (PAT) reflects a growing and profitable business. Therefore, your Board is pleased to recommend a dividend of N657.73 million, representing 55 kobo per ordinary share subject to the approval of shareholders. Applicable taxes will be deducted at the time of payment and paid to the appropriate State or Federal tax authorities.”

The GSK boss also hinted that GSK Global is fully committed to getting ahead of disease and achieving its aim to positively impact the health of 2.5 billion people globally by 2030. It is focused on improved performance through the commercialisation of its portfolio of innovative specialty medicines and vaccines.

Reacting to fears about the future outlook of the company, Onuzo said, “While we expect sustained economic growth in 2023, we cannot overlook some factors which must be duly considered in this quest for economic growth and development in Nigeria. The factors include foreign exchange availability for businesses, insecurity, unemployment, and high cost of doing business, coupled with the uncertainty around fuel subsidy removal. “The challenges ahead are quite significant, as some of you may have read reports from a few media houses regarding the supply constraints on GSK drugs in the market, we must mention that it continues to be very challenging with foreign exchange non-availability affecting our ability to settle foreign currency denominated trade payables with product suppliers.”

“As a result, it remains difficult to maintain consistent supply to the market. We have also received communication from GSK UK and Haleon, the brand owners of our consumer healthcare products regarding the continuation of existing business relationships that necessitates the Board of Directors having further engagements with the GSK Global and our advisors regarding the best way to navigate the current circumstances. We will let you know as the discussions progress.”

Speaking on insinuations regarding the planned exit of the company from Nigeria operations, Mrs. Bisi Bakare President Pragmatic Shareholders Association said it beggars belief that the company would planned such a move without carrying shareholders along.

On his part, the National Coordinator, Independent Shareholders Association of Nigeria (ISAN) Moses Igbrude expressed worries, stressing that there were huge implications inherent in the planned exit of GSK operations from Nigeria.

Another shareholder, Mr Nonah Awoh, said it was disheartening to note that the company had just nine staff at its manufacturing plant, a development he said raised further fears about the planned exit of the company from Nigeria.

A leading renewable energy service provider, GreenPower Overseas Ltd, has been bestowed with the African Best World Class Quality Renewable Energy Company of the Year 2023.

According to the organisers, the AQAA annual event was initiated to celebrate and engage professionals, practitioners and the government on the issue of quality culture and management in Africa.

The Secretary and AQAA General Committee Chairman, Mrs. Ifeoma Favour Emeka, noted that the award is aimed at identifying, recognising and rewarding companies and products that apply quality culture and quality management best practice in achieving their corporate objectives.

Emeka emphasised that celebrating quality excellence in Africa by leveraging quality to develop creative solutions for the future is paramount.

“As part of the event, we have the Africa Quality Congress (AQC), which is a forum of ideas dedicated towards driving quality agenda. The congress is said to be an informative and inspiring day of new ideas, stimulating debates. It will provide delegates with greater understanding of how operational effectiveness and efficiency is vital to organisational success,” she said.

Speaking with The Nation at event, Managing Director of GreenPower Overseas Ltd, Engr. Bamidele Faparusi scored the organiser of AQAA high for giving companies a platform to showcase their products and services on quality at the award.

He noted that the impact of winning such an award by his firm, validates commitment to excellence, which provides a chance to engage with potential customers, partners, and industry professionals, as well as gather feedback and insights from the market.

The energy expert said exhibiting at such events increases visibility and networking opportunities, which can be valuable for business growth and development.

The management and board of Unilever Nigeria Plc has announced the resignation of Mrs. Bidemi Ademola as the Executive Director on the Board of Directors as well as the General Counsel of the company.

In a statement issued by the company, it said the resignation takes effect from 31st May 2023. 

The Board of Directors and management of Unilever Nigeria wished Mrs. Ademola all the very best in her future career and also expressed their sincere gratitude to her for the many valuable contributions and legal expertise she has brought to the company over a distinguished 27-year career at Unilever. 

Commenting on Ademola’s resignation, Managing Director, Unilever Nigeria, Tim Kleinebenne, said, “I would like to thank Bidemi personally for her dedication and commitment through her years in Unilever as well as her important professional contribution to the business.”

Unilever is one of the world’s leading suppliers of consumer goods, with sales in over 190 countries and products used by 3.4 billion people every day.

Unilever Nigeria was formed 100 years ago and is the oldest continually running manufacturing operation in the country.

The company’s vision is to be the global leader in sustainable business and to demonstrate how purpose-led, future-fit business models drive superior performance with a long tradition of being a progressive, responsible business.   

It a time most businesses are facing tough choices in the midst of biting economic crunch, the introduction of the new fiscal policy measures, especially the high increases in excise taxes on alcoholic beverages, tobacco, wines and spirits, effective from 1st of June 2023, will not bode well for the economy, economic analysts have argued.

It may be recalled that the government introduced the new measures in a circular dated 20 April 2023, including excise tax rate increases ranging from 20% to 100% on previously approved rates for alcoholic beverages and tobacco. In the case of wines and spirits, the increase, in some instances, is up to 300%.

Speaking with a cross-section of experts, they have also described as hasty the planned implementation of the new policy regime on alcoholic beverages and other allied goods.

The Nigeria Employers’ Consultative Association (NECA) while expressing their concerns noted that would largely affect manufacturers as well as disrupt the entire value chain of the organised private sector (OPS).

Director-General of NECA, Adewale-Smatt Oyerinde, in a statement, decried the recent circular by the then Minister of Finance, Budget and National Planning, Zainab Ahmed, introducing the FPM, with increases ranging from 20 per cent to 100 per cent on previously-approved rates for alcoholic beverages, tobacco, wines and spirits as well as the introduction of green tax (10 per cent excise duty on single-use plastics.

He urged the government to maintain the status quo on the items involved.

According to him, the government should, as a matter of urgency and national importance, suspend the implementation of the Fiscal Policy Measure and Tariff Amendment as proposed and revert to the 2022 Fiscal Policy Measure roadmap.

Giving insights into organised businesses’ concerns, Oyerinde said the proposed increases would naturally spike the cost of production and reduce the competitiveness of Nigerian manufacturers in both local and international markets.

Linking it with the recent reports of the unemployment rate hovering around 40 per cent, he said the nation’s economy would be further hard-pressed to withstand the likely loss of jobs that follow the increases.

Also an operator who pleaded anonymity added that “the failure of the decision of the government not to afford industry the usual practice of 90-day window between announcement of changes and the effective date of any new rates negates the existing FGN Tax Policy of 2017 and also is against the principle of legitimate expectation. In essence, any new rates only ought to take effect 90 days after the publication of the gazette setting out the details of the increases.”

In the view of Johnson Chukwu, the CEO of Cowry Access Management Company, the new tariff regime, if implemented, would have far-reaching effects on businesses, especially the alcoholic beverage portfolios. 

For instance, the negative impact of government reneging on the established 2022-2024 Excise Duties Roadmap which had reasonable graduated increases on alcoholic beverage, particularly spirits and wines, is seen by industry players as a negation of government policy and another example of policy reversal that is unfriendly to businesses.

For Chukwu, the government should embark on policy measures like the tax increase sparingly because the astronomical increases introduced will mean that parallel trade from smuggling which deprives government of legitimate tax revenues will increase while businesses that pay tax to government will shrink in size and operation.

In its impact assessment of the new policy measures, KPMG, a global audit firm, said it may have more profound negative impacts on the beverages and tobacco manufacturing sectors. This will also inevitably extend to the sector’s expansive value chain of farmers, transporters, logistics services providers, entertainment and hospitality businesses etc.

Further price rises may squeeze consumer demand and worsen already declining business margins such that the expected revenue expected by the government from the increases may be unrealised.

The inadvertent but inevitable consequence of reduction in the absolute revenues accruing to government could be in the potential reduction in Companies Income Tax, Education Tax and PAYE that would result from the reduction in production and business activities in the sector.

Excise duty is essentially a tax levied directly on certain goods and services produced/imported but consumed within a country. Businesses may also have to incur additional costs in complying with excise duty regulations, such as maintaining records and filing tax returns. This can be a burden, especially for smaller businesses that may not have the resources to handle these requirements.

Thus, when excise duty is imposed on a particular product, the cost of producing that product or the consumer price of that product increases, depending on whether it is borne by the producer/importer or passed on to the consumers.

While acknowledging the fact that the government justified the policy to discourage excessive consumption of sugar, tobacco and alcohol, analysts believe that the real intention is to generate revenue to plug the big and widening hole in government’s deficit financing.

With FGN revenue to nominal GDP at about 3%, and a worsening budget deficit from about N1.1 trillion in 2013 to N6.3 trillion in 2022, Nigeria’s debt has risen from N10 trillion in 2013 to over N46 trillion by the end of 2022. This does not include another N23 trillion in Ways and Means advances from the Central Bank of Nigeria (CBN), which the National Assembly recently approved for it to be securitised.

This means national debt will rise above N70 trillion with a debt service ratio that might range between 100-150% of revenue. If nothing is done to increase revenues quickly, Nigeria will have to borrow not only to service its debt but also, to run government operations.

Already Nigerian manufacturing businesses are unable to compete favourably with other African countries and many other countries in the world, given the nation’s relatively higher costs of operations.

However, the urgent need to guarantee long-term FX availability and shore up foreign reserves and stabilise the FX exchange rate is substantially tied to the ability to produce more competitively and export more as well as attract FDI. Yet, both may be hindered by added taxes.

“Accordingly, rather than place added burden on struggling consumer demand, business margins and profitability, and greater competition hurdles with other African countries in particular our recommendation would be to increase oil revenue and non-oil revenue via other measures that don’t create added challenges for consumers and businesses and to adopt more efficient government expenditure,” KPMG advised.

The manufacturing sector as a whole contributed 32.3% of the total local VAT in 2022, making it the sector with the biggest share of VAT for the year, followed by the Information and Communication sector (18.2% of the total local VAT), according to relative VAT data provided by the NBS in her Q4 2022 report. Regarding CIT, the Manufacturing industry also accounted for the greatest share of all local CIT in 2022, at 27.9%.

The average inflation rate on alcoholic beverages stood at 11.45% since 2015 and 12.53% since 2019.

Given that the alcohol sector, particularly wine and spirit, have price inelastic demands for their products, the increase in the excise duties might force them to either bear most, if not all the higher costs from the duty, thereby negatively impacting their margins, or pass it on to their consumers and risk a drop in demand and earnings.

Declining profitability also creates risks of layoffs in that sector as businesses tend to focus first on staff cuts when faced with such cost and profitability challenges. At the same time, it might not necessarily discourage consumption or achieve its environmental goals substantially, since there are so many informal channels to supply the same and unregulated illicit substitutes that cause greater health challenges and environmental challenges.