Food, Beverage & Tobacco subsector expands faster in June despite new excise duty

The Food, Beverage and Tobacco subsector of the manufacturing sector expanded at a faster pace in June 2018, even as the Federation Government increased excise duty on alcoholic beverages and tobacco products by 500 percent in the month.

The latest Purchasing Managers’ Index (PMI) report released on Friday by the Central Bank of Nigeria (CBN) showed that, out of 14 subsectors captured under the survey, 10 including the food, beverage and tobacco reported growth in the review month.

On June 4, the Federal Government through the Ministry of Finance increased the excise duty on the products from 20 percent, a policy which caused an increase in the prices of locally produced alcoholic drinks and tobacco products in the country in the review month.

Different unions within the subsector have called on government to reconsider its stance on the new tariff imposed on their products, noting that the development would ruin business and could lead to loss of about 200,000 jobs.

But, the Minister of Finance, Kemi Adeosun, said the new excise duty was meant to achieve a dual benefit of raising the government’s fiscal revenues and reducing the health hazards associated with tobacco related diseases and alcohol abuse

According to the report, the manufacturing sector, which expanded for the fifteenth consecutive month and grew at a faster rate in June when compared to the index in the previous month, stood at 57.0 index points.

The PMI, which is an indicator of the economic health for manufacturing and services sectors, rose by 0.5 index points from 56.5 index points recorded in May.

Other subsectors which recorded growth in the review month include: paper products; printing & related support activities; plastics & rubber products; electrical equipment; textile, apparel, leather & footwear; chemical & pharmaceutical products; petroleum & coal products and nonmetallic mineral products.

Read also: FG to review excise duty on alcoholic beverages

On the other hand, the transportation equipment; fabricated metal products; primary metal; and cement subsectors declined in the review month.

Production level, which stood at 59.2 points, New orders at 56.2 points, employment level at 55.4 points, all grew at a faster rate in June, 2018, while supplier delivery time which stood at 56.5 points and raw materials inventories at 57.7 points grew at a slower rate in the same period.

Also, the composite PMI for the Non-manufacturing sector stood at 57.5 points in the month under review, indicating expansion in the Non-manufacturing sector for the fourteenth consecutive month. The index grew at a faster rate when compared to 57.3 points recorded in May 2018.

Business activity, new orders, and employment level in the non-manucfacturing sector grew at a faster rate, recording 59.1 points, 56.4 points and 55.9 points in June as against 58.7 points, 55.9 points and 55.6 points recorded in the preceding month.

In contrast, the Non-manufacturing inventory grew at a slower rate at 58.5 points in the review month compared to 59.2 points achieved in the previous month.

 

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