Government’s new tobacco laws could be ‘bad’ for business
Health minister Isaac Adewole said that the government would begin enforcement of parts of the National Tobacco Control Act (2015). In addition, the government was considering using tobacco tax and levies to fund the government’s Universal healthcare programme. Here is a summary of the sections that will be enforced.
- Tobacco products will no longer be sold to anyone below 18.
- Tobacco will no longer be sold in single sticks but a pack of 20.
- Ban of marketing of tobacco through the internet or online platforms.
- Prohibition of smoking in a child care, educational or hospital environment.
- Prohibition of smoking in a public gathering such as playground, restaurants, bars.
Prosecution of a manager who allows smoking in a restaurant, bar or similar establishment.
- Ban on advert or promotion of tobacco products in a manner not approved by the Standard Organization of Nigeria (SON).
While the laws are not new, the renewed move to enforce them will lead to a drop in profit or revenue for several businesses and the tobacco industry as a whole. Here are a few reasons why this is great for healthcare but bad for business.
Tobacco can no longer be sold in single sticks.
Retail sellers will be hard hit by this. Most buyers of tobacco, often buy a few sticks for immediate consumption. This provision of the law will lead to a drop in sales for retailers who will be forced to stop selling single sticks or may decide to stop selling at increased prices. Both measures will lead to a drop in demand which means less money for both retailers and tobacco manufacturers.
Prohibition of smoking in a child care, hospital or educational environment.
Tobacco products will no longer be sold to people below 18.
This means people who want to buy cigarettes will require proof of being older than 18. A large chunk of the country’s population do not have IDs. This may lead to a drop in the quantity of tobacco that will be sold, or an increase in the prices as the cigarettes will be sold illegally to those without identification.
This perhaps is the biggest blow to the tobacco industry in the country. A large percentage of smokers in the country are young people. Higher institutions in the country are a mix of both childcare and education. The ban on smoking indirectly reduces the volume of tobacco sales.
Restaurant and club owners will experience a drop in revenue and patronage. One of the most profitable sources of revenue for restaurant and club owners is sale of cigarettes and alcohol. Both are often inseparable. Enforcing this law means party lovers may decide to stay away. The clubs may also be forced to have lounges for only smokers, which is an additional expense and may be less profitable.
The ban on online advertising will lead to a drop in revenue for several online platforms, such as blogs and even websites of print media.
While the government may make revenue running into billions from enforcing the law, in the immediate and medium term it will lead to a fall in the demand of tobacco products. This in turn leads to reduced revenue for the firms. The drop in demand and revenue will lead to laying off workers. Taxes paid by the companies will also reduce.