Sachet water-producing companies have succeeded in pushing the price of this essential commodity up like other consumables. ONYEKORMAKA ASABOR hazards an explanation to the development
Enter sachet water
The advent of sachet water in the early 1990s to complement table water was embraced by consumers as a perfect alternative. It came as a stopgap between ‘ice water’ (cold water tied manually, which hygienic status was suspect) and industrial bottled water, which was relatively expensive. Called ‘pure water’, the price then was about 50 kobo, while ice water was selling about 10 kobo.
The price of ‘pure water’ eventually got to N5.00 before 2015 when the All Progressives Congress government led by President Muhammadu Buhari took power. Previous attempts to raise the price was resisted by consumers, especially Lagos touts, who are one of the major patrons.
From 2015, headline inflation visited the water business; ‘pure water’ started selling at N10 as the bag of 20 sold for N120 in Lagos. In Niger, it sold for N80 a bag/N5 a sachet, while in Ogun and Osun, it was N100/N10.
However, with the current price of sachet water at N180 per bag, the retailers sell a sachet for N20 and three sachets for N50. Bottled water sells between N70 ànd N100 for 60cl or 75cl bottle, depending on the brand.
Root of further hike
Analysts have traced the increase in prices of packaged water to the devastating impact of the Coronavirus Disease, which disrupted the supply chains of consumer goods.
In as much as the foregoing view cannot be wished away, the price increase can also be linked to the events of 2017 when the Association of Table Water Producers of Nigeria, Lagos State chapter, began to draw the attention of government to the plight of water processors. The President, Mrs Clementina Ativie, warned that Lagos risked losing investors in table water production to neighbouring Ogun and Oyo states, following multiple levies hitting hard on their bottom-line.
She said, “Our members are poised to relocate to Ogun and Oyo. We have 2,600 members, with each employing at least 20 workers.
“We want to clearly know what to pay annually and to whom. Government should ensure that one central body collects the taxes in an orderly manner and we will prevail on some of our members who have left to return to Lagos. We have the market here.”
Mrs Ativie said the group had complained severally and petitioned the government on the issue of multiplicity of levies imposed on them by different agencies of the government with overlapping roles, but to no avail.
She added that the group was prepared to move out en masse to get a hub in Ogun, which might cost Lagos about N1bn in revenue.
Her words, “Lagos is Nigeria’s economic capital and fifth biggest economy in Africa, hosting thousands of businesses, including multinationals. However, it is hobbled by multiple taxation, which is forcing businesses to consider a more favourable Ogun State. Taxation is an important canon used by investors to determine how friendly a business environment is.
“Does it make business sense for an entrepreneur in water business to be overtaxed, and more so categorised under businesses whose products are subjected to payment of Value Added Tax?”
A Federal High Court, in 2015, ruled that water is a basic food item and, therefore, exempted from VAT, regardless of whether it has been processed or packaged. In its ruling, the court did not follow an earlier decision in the case of Monamer Khod Enterprise V. FIRS where it was held that sale of packaged water is liable to VAT.
Just few weeks ago, Ativie blamed the increment in the price of table water to high cost of production, explaining that, for many years, a bottle of 75cl water cost N50 in the local market, but was recently raised to between N70 and N100, depending on the location where it was purchased. Though few years before now, 75cl bottled water had been selling for N100 each in other southern states, except Lagos.
Speaking at the 2021 World Water Day in Lagos, Ativie said if water producers sold water products based on their input during production, many Nigerians would not be able to pay for them.
According to her, the increase in the price of packaged water was caused by many factors.
“I can tell you that if we set the price, considering what it takes us to process water, 99 per cent of Nigerians will not be able to afford it. The same water that we are increasing the price is still N10. Table water is N70, but the materials we use have become dear. What we used about N480,000 to buy before has shot up to N1.5m. So, tell me why we cannot increase the price? For over 12 years, the price remained stable, but every other thing has increased.
“We have been bridging the gap and making sure we produce. In fact, we have been subsidising the cost,” Ativie said.
Against the backdrop of the challenges faced by packaged water producers, she averred that entrepreneurs in the sector were not in any way making profit, let alone much profit, disclosing that “the business is merely driven by passion.”
She explained, “Once you are into it, it is difficult for you to quit. A lot of us in the business, aside the quacks, are pulling in money from other businesses to sustain it. Quacks are not adding value to the product. That is why we are insisting that the regulatory agencies, such as the National Agency for Food and Drug Administration and Control, should carry ATWAP along, to help the members rid the industry of quacks.”
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