Author: Olumayowa Okediran

Nigeria’s Alcohol ban is an attack on consumers’ freedom, small business owners

Nigeria’s ban on alcohol recently made the rounds in the news on local media outlets. The announcement disclosed in a statement by the National Agency for Foods and Drugs Administration and Control (NAFDAC) director-general, Prof. Christianah Mojisola Adeyeye, stated that the Federal government had issued directives targeted at phasing out the sale and consumption of alcohol in sachets and polyethylene terephthalate (PET) bottles. This means that the regulatory agency will no longer register new products in sachet and small volume PET or glass bottles above 30 per cent Alcohol by Volume (ABV) and also mandated alcohol companies to drive down production by at least 50% enforceable for January 31, 2020. This article highlights the effect of the ban on small business owners and the limitation to the freedom of consumer choice. 

This partial ban on alcohol seems to only be targeted at a specific set of people – Low income earners. The dominant consumers of alcohol in sachets and small bottles are low income earners, just as the predominant retailers of alcohol in this packaging are small businesses who own small kiosks or even hawk their wares. In fact, the reason big companies often go the route of selling alcohol in sachets and small packs is because that is the only way low income earners can afford them. Shutting out this access is in fact seeking to erase the end of one market. This prohibitionist approach effectively cuts off many low-income earners from participating in the alcohol market. This is likely to cause economically disadvantaged people to buy alcohol in excess of what their finances ordinarily allow as affordable options are being taken out of the market. It essentially signals to low income earners to buy more alcohol since the only option they are left with is to buy alcohol in bigger packaging. Also, by making the sale of alcohol in sachets illegal, there is also the possibility of certain individuals taking advantage of the demand for sachet alcohol by illegally apportioning alcohol in sachets and other smaller containers under potentially unhygienic conditions.

Beyond the suffocation of economic activities at the base of the pyramid, an outright ban conflicts with the freedom of consumers to choose and the importance of markets, this is another example of the Nigerian government’s overarching involvement in the choices of Nigerians. The agency had highlighted that uncontrolled access and availability of high concentration alcohol contribute to substance and alcohol abuse in Nigeria transitioning into a negative impact in the society. One of the best approaches to curbing substance use has been used in the tobacco industry. Without banning its usage, members of the public are made aware of the consequences of tobacco use and allowed to make their own decisions. 


The Nigerian government has become increasingly overreaching in its responsibilities by taking away decisions that should ideally be left to consumers. Usually, when a group of people make decisions for others, they do this with their own bias and without much knowledge of the motives of the eventual consumers. The truth is that consumers are usually aware of the risks and benefits associated with products they use before consumption. However, the most ideal approach should be to make any new information about certain products publicly available so that consumers can have more information that can help them make informed decisions. Due to the absence of a perfect product, consumers often always juxtapose the risks and benefits associated with each product they consume with alternatives available. While certain persons will embrace certain risks, others are less likely to do so or may simply choose preferable risks. Banning products reduces the alternatives for users, limiting the available solutions to their problems as everyone who makes a purchase of an item is looking to solve an important problem.

Banning the sale of alcohol as well as instructing companies to deliberately lower their production below their capacities and operate at 50 percent efficiency irrespective of market demand is detrimental to an economy. It is also a direct affront on the freedoms that consumers should have in an open market. 

NIPOST, GOVERNMENTS MUST STOP USING PRIVATE ORGANIZATIONS AS SCAPEGOATS FOR THEIR FAILURES.

Few days ago, The Nigeria Postal Service (NIPOST) introduced a new set of charges that required operating courier services across the country to pay the agency for licences to operate. Beyond this, each courier service has to submit documents that could influence NIPOST’s decision to grant a licence or not. The new charges which rivalled the setup costs of new courier services ranged from 20 million naira to 250,000 naira per year depending on the cadre these companies do business. While public outrage caused the Minister of Communications and Digital Economy, Dr Isa Pantami to demand NIPOST to suspend the new tariff on registration of courier services, it does not change the dubious situation where a player in the logistics industry is also acting as the regulator of that industry and attempting to use its taxation powers to suffocate the others players in the market. 

In the past few months, especially after the government placed a nationwide lockdown effectively forcing many businesses to operate from home, online retailing provided the leeway for several companies to stay alive. Due to the positive flux of online services, a supporting logistics sector rose in its number of players. This made sense to enable goods to be delivered to people who are unable to leave their homes. Asides this, as the Lagos State government placed a ban on motorcycles, several transportation workers turned their assets to the logistics sector. This simply required them to invest in a bag or delivery box fitted to their motorcycles. With little branding, several small couriers emerged and managed to stay afloat while the economy took a downturn. A boost in online retail  also meant that effects on the dwindling naira could be further mitigated while customers were able to access important goods whether far or near.

In the same period, NIPOST was receiving scrutiny for its years of failure. Among others, the organization had lost its stamp duty revenue to a fellow government agency, the Federal Inland Revenue Service while the government sought to carve out three subsidiary companies out of it. The Director-General of the Bureau of Public Enterprises (BPE), Alex Okoh had identified these companies to be NIPOST Properties and Development Company; NIPOST Transport and Logistics Company; and NIPOST Microfinance bank Limited. In a scramble to retain its relevance, the agency, which oversees the Courier Regulatory Department (CRD) that registers and regulates the logistics market and also EMS/Parcel Nigeria which runs a delivery service, introduced a new set of bogus charges as it tried to stamp its feet as a regular of the industry – especially in a way that ensured it made ridiculous amounts of money at the expense of business owners in a name of licensing fees. At the same time, the agency invested more in delivery vehicles to raise its play in the logistics market. They then try to cover their dubious actions by their sudden urge to help people protect their items from bad logistics companies. 

It is difficult to forgive such lack of insight and empathy – when licensing fees rival startup capital, not even taking into account all the other legal and duplicated levies banded on these logistics companies. The agency definitely does not need that amount of money in registration to be able to determine the legitimacy of players in the market. All the information can be supplied to the agency for free. Draconian measures like this ensure customers who were able to access products and services beyond their vicinity might now have to pay through their noses for such access or limit their choices to their surroundings. This development effectively limits the choices of consumers by reducing the players in the logistic sector and increasing the delivery cost of goods.

It is an absurd arrangement for NIPOST which runs a commercial delivery service to regulate other delivery service providers. In a country where the government is notorious for decimating the progress of local business initiatives, reigning an agency with such power renders the space unhealthy for local players. NIPOST becomes a yardstick in an industry it has repeatedly failed at making progress. This anomaly needs to be addressed and very quickly too.

In the past, another public entity had given way for new entrants in the telecommunication industry. Before then, NITEL operated as a monopoly until 1992 when a regulatory body Nigerian Communications Commission was created and new entrants were allowed. This decision was eventually vindicated when NITEL continued on the path of underperformance and never actually met the standards that private organizations set subsequently. Several attempts were made to save NITEL from going down, but its assets were handed over to NATCOM (Ntel’s parent company) in a deal worth $252 million in 2015. The success of the telecommunication industry has been attributed to allowing private organizations to provide key services to the public while allowing the market to sift for excellence. 

NIPOST playing both player and referee is a recipe for disaster. Logistics is a foundation of trade and disruptions in logistics easily raise costs of trade and prices in the market – thus leading to loss of jobs and higher costs of living. 

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