GlaxoSmithKline Nigeria has announced plans to shut down its manufacturing plant in Agbara Industrial Estate, Ogun state by 2021 as part of a restructuring process of its internal operating model. In a notice to the Nigerian Stock Exchange on Tuesday, the pharmaceutical company said that effective from Q3 2021, it would begin to work with local contract manufacturers for the production of its products and transfer technical knowledge to improve local production capacity. The move, the firm said, would not stop its listing of about 40 years on the NSE. According to the Board of Directors, the changes will allow GSK to build a more sustainable commercial business, enabling it to continue with its ongoing efforts in supporting access to GSK’s consumer health products, medicines and vaccines. In June 2018, the firm announced its intentions to sell Horlicks, its malted drinks business, to fund a $13 billion buyout in its consumer healthcare joint venture with Novartis. It also sold two-third of its Agbara plant to Suntory when it sold its drinks segment that produced Ribena and Lucozade to the company.
There is uncertainty about Oando’s ability to continue as a going concern, according to Ernst & Young, the oil firm’s auditors, despite the company reporting an increased profit in the past financial year. The auditors, in their report following the financial statements, said while profit after tax rose 46 percent to ₦28.8 billion ($80 million), the company recorded comprehensive losses for the year of ₦18.3 billion and that current liabilities exceeded current assets by ₦63 billion. In addition, Oando’s debt rose to $2.5 billion after acquiring oil and gas assets from U.S. giant ConocoPhillips, which increased its finance costs and stalled growth. A shareholder dispute and an investigation by SEC into possible insider trading added to the company’s woes as the London Court of International Arbitration last year ordered two companies owned by CEO, Wale Tinubu and his deputy, Mofe Boyo, to pay $680 million to Ansbury Investment following a dispute over shareholding and financial management of the energy company. Ansbury is owned by the family of Nigerian-Italian businessman Gabriele Volpi. Oando shares slumped 9.7 percent to ₦5.10 naira at the close of the Exchange, the biggest retreat in more than a month, and were unchanged at the opening Tuesday.
Brewing giants, AB InBev SA, Heineken BV and Diageo, are now faced with the challenge of increased excise duties by the FG amid the highly competitive market. The government in January this year implanted a 17 percent increase in duties on alcoholic drinks after it announced an increased tax in June 2018. The move to make up for weak revenue from the oil sector, is making the business environment more difficult for the alcoholic drinks companies in an economy that contracted in 2016 and has faced double-digit inflation since then. According to an economist Michael Famoroti, “the tax increase is hitting revenue,” as the industry is unlikely to record a healthy revenue growth with the new excise. The FG raised the taxes and increase borrowing on local and international markets after failing to meet its revenue targets in the past three years, primarily due to lower-than-expected oil exports — its main source of income. Budget and Planning Minister, Udo Udoma, put the country’s receipts at about 55 percent of expected earnings last year. The levies have hit demand. According to a Lagos-based market analysts, Operation Olowoporoku, “Consumers remain highly sensitive to price movements following the broad-based cost escalation in the past few years amid little-to-no-income growth as higher pressure is expected on discretionary, non-essential products such as beer.”
Nigeria and Cape Verde have concluded an agreement on air services.The Minister of State for Aviation, Hadi Sirika, said the move was in line with existing Bilateral Air Service Agreement between both countries, as well as the provisions of the Single African Air Transport Market, a flagship project of the African Union Agenda 2063 designed to create a single unified air transport market within the continent. Sirika said the agreement was for Cape Verde to begin flights to Nigeria and also build an embassy in Abuja.