Lagos — For brewing giants AB InBev, Heineken and Diageo competing for market share in Africa’s most populous country, the Nigerian government’s decision to hike excise duties is another setback in an underperforming economy. President Muhammadu Buhari’s administration followed up its June decision to impose taxes on beer and spirits by deciding in January to implement another phased 17% increase in duties on alcoholic beverages. The move, in part to counter flagging revenue from the key oil industry, is making the business environment more difficult for the drink giants in an economy that contracted in 2016 and has faced double-digit inflation since then. “The tax increase is hitting revenue,” Michael Famoroti, economist and partner at Stears Business, said by phone from Lagos. “You are unlikely to see healthy revenue growth in the industry as the phased implementation continues. Companies will not be able to pass on the full burden of the tax.” The government raised the taxes and ...

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