NAFDAC vs Beverage Manufacturers: Who Will Save the Economy?

Expectedly, the decision of the National Agency for Food and Drug Administration and Control, NAFDAC, to ban the production and consumption of drinks in sachets and pet bottles, has pitted it against the manufacturers. Feeling the pulse of the people, Raheem Akingbolu, writes that the federal government and the agency may need to take another look at the decision in the interest of the economy

From Calabar to Oyo, Abuja to Enugu, Lagos to Gombe, the story is the same; fear and anxiety. Many Nigerians, among them consumers and many others who earn their daily income from sale or working in companies that produce alcoholic drinks in sachets and pet bottles are confused over the recent pronouncement that the National Agency for Food and Drug Administration and Control (NAFDAC), had banned alcoholic drinks in sachets and pet bottles.

For many years now, in view of the poverty level in Nigeria, low-income earners and petty traders have depended on sachet products, both in beverage and drinks for survival. In the dairy industry, it was started by Cowbell when the middle-income earners could no longer afford milk in tins. Little by little, bigger players in the industry started keying in until sachet milk and beverages gain total acceptability across board. No thanks to the decline in purchasing power of consumers and the accompanying deterioration of the standard of living of average consumers.

This was also the situation in the energy drink market when Power Horse, Redbull and others in cans were no more affordable for average consumers, a brilliant local manufacturer -Rite Foods introduced its fearless in Pet bottles which was cheaper and affordable. Today, nothing less than five manufactures, among them multinationals, have started producing their various energy drinks products in Pet bottles.

This also affected the economic situation in the country when some savvy manufacturers thought out of the box and went into production of drinks in sachets and pet bottles. Until February 1, exactly two weeks ago, when Mojisola Adeyeye, the DG of NAFDAC, wielded the big stick, it had become a multibillion-naira sector, employing and engaging millions of Nigerians. But their honeymoon appeared to be ending following what some labour unions have described ‘erratic decision of NAFDAC’ to phase the products out of the market for reasons linked to abuse.

To this end, various stakeholders who are concerned with the matter, especially labour unions, retailers, consumers and employees of the various companies manufacturing the drinks, who spoke to our correspondent didn’t only fault the timing of the

ban but argued that the development will further wreck the country’s economy.

Adeyeye, the DG of NAFDAC has insisted that the uncontrolled access and availability of high concentration alcohol in sachets and small volume PET or glass bottles contribute to substance and alcohol abuse in Nigeria.

Though substance abuse is a critical issue in Nigeria, many analysts have consistently argued that alcohol has little or no contribution to it and have therefore advised the agency to look farther and tread softly as the beverage manufacturing companies producing sachets and small bottles employ millions of people, contribute to government revenues, and engage in numerous social responsibilities.

Beyond the possible impact of the phase out on the manufacturing companies, many Nigerians are worried that the development will further frustrate the Federal Government’s efforts to woo investors.

Looking back to the last five years, one of the major ambitions that has remained constant on the FG’s agenda has been to attract investors. In September 2022, the former President, Muhammadu Buhari, had told foreign investors in New York that Nigeria’s economy was ripe for increased investment. This was as he lamented the reduced private capital inflows, especially Foreign Direct Investment for infrastructure and natural resource access projects.

“Overall, the Nigerian economy is ripe for increased investment. But on the contrary, private capital flows into Nigeria, consisting mainly of Foreign Direct Investment, have slowed, hindering the financing of much-needed infrastructure,” Buhari said at the Nigeria International Economic Partnership Forum held on the margins of the 77th UN General Assembly.

This is also the situation under the current administration, with President Bola Tinubu, reiterating his commitment to ensuring consistency in policy and a better business climate to attract investors. But despite all the efforts and assurances, Nigeria still remains a dreaded land for investors, save for a few companies that stay put in the market, despite the odds.

In particular, many analysts have wondered why manufacturers in the wine and spirit sub-sector of the Manufacturing Association of Nigeria, that have invested so much and endured so much should now be the ones to be discarded in a way that is likened to a shabby treatment to the chicken that lays the golden eggs.

However, narrowing the conversation to the issue of banning sachet drinks as a result of drug abuse, one of the Nigeria’s representatives of Interweave Solution international, a non-governmental organization that provides master of business in the street and success, Mr, Williams Ojo, said the decision to ban drink in sachet on the basis of contributing to drug abuse is like calling a dog a bad name in order to hang it.

“To me, the reason given by NAFDAC to ban drink in sachets is a mere institutional blackmail, a case of calling the dog a bad name in order to hang it. From any angle the agency chooses to look at it, the most germane issue is whether substance abuse is directly connected to alcohol consumption. If a ban is placed on the sale of alcohol in sachets and small bottles, it may seem that the regulatory authority is just scratching the surface of the menace without looking at the root cause of drug abuse in Nigeria,” Ojo said.

As argued by the Interweave Solution International director and given the deep-rooted nature of the drug problem, many other analysts and observers believe that substance abuse has little or nothing to do with alcohol.

Meanwhile, speaking at the Lagos State House of Assembly during a protest recently, the Vice Chairman, Trade Union Congress, Lagos Chapter, Comrade Emmanuel Edoghe reiterated the need for NAFDAC to rescind its decision on the ban of the premium alcoholic drink and sachets considering the huge investment made by the companies and the existing purchasing power of the people.

“It’s disappointing and insensitive for NAFDAC to take the decision without taking into consideration over 500,000 direct and over 5million indirect jobs that are put on the line should the ban stand. The regulatory agency did not consider over ₦800 billion worth of investment in the sector should the ban take effect. It failed to consider the security risk the ban would be fueling should the ban be implemented. Again, the agency failed to take into consideration the colossal loss the investors in the value chain would be facing and it failed to recognize that the banking sector that gave loans to the value chain for investment in the sector would lose their money. To me, it is very sad that a reputable government agency like NAFDAC would take such decision that is capable of deindustrializing the country’s industrial sector,” the union leader stated.

While purportedly aimed at curbing alcohol abuse, it has been argued by many observers that the move is emblematic of a broader discourse that vilifies sachets, labeling them as dispensable and undesirable packaging formats. However, against the backdrop of Nigeria’s economic challenges, sachets have emerged as an indispensable lifeline for both consumers and businesses, challenging the rationale behind the ban.

Blessin Ajakaye, an Abuja based market research expert while condemning the decision said; “in Nigeria, a country characterized by economic volatility and widespread economic hardship, sachets serve as a critical conduit for ensuring access to essential products for millions of people. The affordability and convenience offered by sachets make them a preferred choice among consumers, particularly those with limited purchasing power. Whether it’s food items, personal care products, or household essentials, sachets allow individuals to buy in small, manageable quantities, stretching their limited budgets and meeting immediate needs without undue financial strain,”

According to Ajakaye, “sachets have become a cornerstone of Nigeria’s informal economy, offering a pathway to economic participation and livelihood generation for countless small-scale producers, vendors, and distributors. “The low barrier to entry into sachet production empowers entrepreneurs to establish businesses and generate income, thereby contributing to employment creation and economic resilience in local communities,”

To this expert, the NAFDAC ban on alcoholic beverages in sachets and pet bottles represents a stark departure from recognizing sachets’ economic utility. By targeting sachets, she pointed out that the action goes beyond a mere regulatory measure; but symbolizes a broader indictment of sachets as a packaging format.

“Finally, I want to emphasise that such a narrative fails to acknowledge the economic significance and socio-economic realities of Nigeria. One of the most compelling arguments in defense of sachets is their role in enhancing accessibility to essential goods, particularly in regions where traditional retail infrastructure is lacking, such as rural areas. Sachets bridge the gap between supply and demand by making products available in small, affordable packages. This ensures that even the most marginalized communities have access to basic necessities, thus contributing to poverty alleviation and social inclusion,”

As pointed out by most of those who spoke to our correspondent, sachets serve as a catalyst for entrepreneurship, empowering small-scale producers and artisans to participate in the economy and create value. From local manufacturers of spices and condiments to craftsmen producing personal care products, sachets provide a platform for innovation and enterprise, driving economic growth from the grassroots level.

To these sets of people, banning sachets undermines consumer choice and market dynamics. It’s believed that by dictating packaging preferences, NAFDAC restricts the options available to consumers, potentially exacerbating economic inequalities and depriving individuals of affordable alternatives.

The conclusion in some quarters is that the recent ban on alcoholic beverages in sachets and pet bottles underscores a disconnect between regulatory intentions and economic realities. While concerns about alcohol abuse are valid, many contended that scapegoating sachets overlooks NAFDAC instrumental role in Nigeria’s economy and society.

To this end, the agency has been advised that rather than condemning sachets outright, policymakers should recognise their economic utility and explore measures to address any associated social issues responsibly.

As Nigeria grapples with its economic challenges, it has been pointed out that sachets remain a symbol of resilience and resourcefulness, embodying the spirit of entrepreneurship and adaptation in the face of adversity.

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