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Monday, October 28

Guinness: VAT increase’ll impact manufacturers negatively

Chairman of Guinness Nigeria Plc, Mr. Babatunde Savage, has expressed concern over the proposed increased in Value Added Tax, VAT, rate, stating that it would negatively impact manufacturing firms in the country, increase the cost of doing business and further reduce the disposable income of Nigerians.

Speaking at the 2019 Annual General Meeting of Guinness Nigeria in Abuja, Savage also declared that Nigeria still remained a challenging environment to conduct business with the glaring absence of critical infrastructure, such as good roads, reliable power supply and good transportation system among others.

He said, “This lack of infrastructure is epitomized by the continued gridlock at the Lagos ports which has constrained access to the port and getting out imported raw materials and finished products, as well as serious constraints for export.

“In addition, there is growing insecurity in various parts of the country, which has contributed to the challenging business environment and continues to be a major threat to the economic and political stability of the country.”

He bemoaned the fact that all these challenges had increasingly contributed to the exorbitant cost of doing business, brought about a steep reduction in consumer purchasing power and increased poverty among Nigerians.

Savage explained that the resultant pressure on consumer disposable income was reflected in the performance of most companies delivering below par financial results.

He further called for efforts to eliminate multiple taxations, while he explained that for strategic reasons, the company might not be able to transfer the effect of an increase in taxes, such as the excise duties to customers.

He said, “You can see the way the economy is and the purchasing power of individuals. Sometimes it is difficult for businesses to pass on all the cost. If they do that, it brings about an increase in the price of their products and their volume would go down sharply and even the result would be worse than what we see.”

However, he noted that in spite of the challenges in the business environment and intense competition in the brewing industry, Guinness Nigeria remained profitable in its 2019 fiscal year, while the company is resolute in its commitment to improve on its performance and deliver greater returns on investment for its shareholders.

Also speaking, Managing Director/Chief Executive Officer of Guinness Nigeria, Mr. Baker Magunda, said the company would continue to invest in its operations, adopt innovative processes and guarantee consistent returns to its shareholders.

He added that the company was promoting local content in its production, noting that currently, the company had attained 70 per cent local content in its production input and was seeking to improve it further.

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