By Jimisayo Opanuga
The National Agency for Food and Drug Administration and Control (NAFDAC) has commenced enforcement of a ban on the production and sale of alcoholic beverages produced in sachets, small-volume PET bottles, and glass bottles below 200 ml. NAFDAC’s Director-General, Professor Mojisola Adeyeye, disclosed this on Monday 29 January 2014 at a press conference in Abuja. She said the ban would be effective from Thursday, February 1, 2024.
“As of January 31, 2024, there is no alcoholic beverage in these categories that are registered by NAFDAC,” Adeyeye said. “I also want to inform you that the agency has started enforcement actions to facilitate the implementation of this policy. The window period given to manufacturers by NAFDAC to sell off all alcoholic drinks in this category elapsed on January 31, 2024. To this end, on the first day after the elapse of the window period, the agency commenced nationwide enforcement actions on February 1, 2024, to facilitate the implementation of the new policy.”
The Director-General disclosed that the ban was based on the recommendation of a high-powered committee of the Federal Ministry of Health and the Federal Competition and Consumer Protection Commission (FCCPC). The industry was represented by the Association of Food, Beverages and Tobacco Employers (AFBTE) and the Distillers and Blenders Association of Nigeria (DIBAN) in December 2018.
Adeyeye said the people most at risk of the negative effects of consuming the banned pack sizes of alcoholic beverages are underage and commercial vehicle drivers and riders. The World Health Organisation, according to the NAFDAC boss, has established that children who drink alcohol are more likely to use drugs, get bad grades, suffer injury or death, engage in risky sexual activity, make bad decisions and have health problems. Adeyeye also disclosed that, in the course of enforcing the ban, the agency has discovered that manufacturers are still producing or possessing banned products and packaging materials, emphasizing that this is a serious violation.
“This situation is of course not acceptable and the Agency views this as flagrant disobedience of the laws of Nigeria. NAFDAC views this matter seriously and will engage all statutory means, which may include prosecution, to deal with the matter.”
Adeyeye, however, urged all holders of banned alcohol products and packaging materials to surrender them for destruction to avoid further consequences.
In an unrelated development, PZ Cussons, the British Fast-Moving Consumer Goods (FMCG) Company, has cut profit expectations for 2024 due to the impact of the naira devaluation on its Nigerian business. The British health and beauty manufacturer cut its dividend following a 70 percent decline in the value of the naira, which it said has had a “significant” impact on its trading this year.
The company’s share price recently tumbled 17.65 percent, according to data from the London Stock Exchange. “As we set out in September 2023, macroeconomic developments in Nigeria would be the key determinant of the full-year 24 results,” Jonathan Myers, chief executive officer said. “While we continue to make good progress in managing this volatility, the further devaluation in recent weeks will inevitably impact our full-year 24 results,” Myers said.
“As a board, we have taken the prudent step to reduce the interim dividend in light of the devaluation,” Myers said. In an update to markets, PZ said that because the naira has lost so much of its value, it will only pay an interim dividend of 1.50p in April, 44 percent less than analysts had expected.
PZ’s Nigeria business makes up 35 percent of revenue and 22 percent of net assets. According to its fiscal year ended August 2023, PZ Cusson Nigeria recorded a loss after tax of N38.64 billion for its fiscal year from a profit of N1.30 billion recorded in 2022. PZ Cusson now sees adjusted operating profit in the range of £55 million ($69 million) to £60 million for fiscal 2024, compared with a range of £61.5 million to £68.2 million previously, it said.
The devaluation of the Naira in June 2023 caused quite a shock in the Nigerian business environment with many companies accruing losses due to their foreign exchange exposures. Nigerian President Bola Tinubu’s reforms including the removal of petrol subsidy and naira devaluation, implemented in the second quarter of the year, pushed the inflation rate to the highest level in 20 years.
The naira has plunged to record lows across markets since the Central Bank allowed it to weaken by as much as 40 percent against the dollar in June. Over the past seven years, several manufacturers, especially in the fast-moving consumer goods industry, have either left the country or stopped production of some of their products as a result of the difficult operating environment. Problems such as rising interest rates, surging inflationary pressure, and foreign exchange volatility are impacting input costs, operating expenses and the general profitability of businesses in Africa’s most populous nation.
FCMG companies recorded foreign exchange loss amounting to N269.50 billion in the first nine months of 2023 from N13.56 billion in the same period of 2022.