Onome Amuge
Renewed calls for higher taxes on sugar-sweetened non-alcoholic beverages have triggered a fresh debate in Nigeria over the balance between public health objectives and economic resilience, as business groups warn that additional fiscal pressure could undermine one of the country’s most important manufacturing sectors.
Muda Yusuf, chief executive of the Centre for the Promotion of Private Enterprise (CPPE), said proposals for a sugar-specific tax were economically risky, weakly supported by evidence and poorly aligned with Nigeria’s structural and macroeconomic realities. While acknowledging the growing burden of non-communicable diseases such as diabetes and cardiovascular conditions, he argued that taxation was being advanced as a policy shortcut rather than as part of a comprehensive health strategy.
“Public health challenges undoubtedly require urgent attention. But the proposition of a sugar tax, particularly in the current Nigerian context, is misplaced and insufficiently grounded in empirical evidence,” Yusuf said.
The debate reflects a global policy trend in which fiscal tools, including levies on sugary drinks, have been promoted by international health institutions as a means of discouraging consumption. However, Yusuf said such approaches were often imported wholesale into developing economies without adequate consideration of local economic conditions. In Nigeria, he argued, high inflation, weak consumer purchasing power, fragile industrial recovery and widespread poverty significantly alter the cost-benefit calculus.
Data from the National Bureau of Statistics show that the industry accounts for roughly 40 per cent of total manufacturing output, making it a critical contributor to industrial growth, employment and value creation. Within that, non-alcoholic beverages represent a particularly dynamic sub-sector, with extensive links to agriculture, packaging, logistics and retail.
Beyond factory floors, the sector supports a value chain encompassing farmers, agro-input suppliers, processors, distributors, wholesalers, retailers and hospitality businesses. According to CPPE, millions of livelihoods depend directly or indirectly on its continued viability. Any policy that constrains output or investment therefore risks wider economic spillovers, including job losses, falling household incomes and setbacks to poverty-reduction efforts.
Manufacturers argue that the industry is already operating under heavy fiscal and cost pressures. Existing obligations include a 30 per cent company income tax, 7.5 per cent value-added tax, a N10-per-litre excise duty on non-alcoholic beverages, a 4 per cent national development levy on assessable profits and a 4 per cent free-on-board levy on imported inputs. These are in addition to import duties of between 5 and 15 per cent on intermediate raw materials, a 0.5 per cent ECOWAS levy, property taxes and multiple state and local government charges.
These taxes are layered on top of structural challenges such as high energy costs, weak transport infrastructure, volatile exchange rates and elevated interest rates. The cumulative effect, CPPE said, has been rising production costs, squeezed margins and a more cautious investment climate. Consumers, meanwhile, have already felt the impact. Retail prices of many non-alcoholic beverages have risen by about 50 per cent over the past two years, eroding affordability even without the introduction of new taxes.
Against this backdrop, CPPE questions the public health rationale for further fiscal measures. While sugar taxes may influence consumption at the margin, evidence from comparable markets suggests that health gains are limited unless taxation is embedded within broader lifestyle and behavioural interventions. In Nigeria, Yusuf said, the rise in diabetes and related conditions is driven less by sugary drinks alone than by a combination of poor overall diet quality, carbohydrate-heavy meals, physical inactivity, sedentary urban lifestyles and genetic factors.
“Taxation does not address these root causes. What it does deliver are immediate economic costs including higher consumer prices, reduced demand, job losses and weaker industrial investment,” he said.
CPPE argues that a more sustainable approach would focus on preventive and enabling measures rather than punitive taxation. These include lifestyle and nutrition education, community-based health awareness programmes, the promotion of physical activity and exercise, and policies that encourage the consumption of fruits and vegetables. The group also advocates healthy food subsidies and urban planning reforms that support walking, cycling and active transportation.
Such interventions, Yusuf said, would directly tackle the underlying drivers of non-communicable diseases while delivering social benefits. Crucially, they would avoid undermining a sector that remains central to Nigeria’s manufacturing base at a time when the economy is still recovering from multiple shocks.
Nigeria’s economic context adds urgency to the debate. After a prolonged period of macroeconomic instability, policymakers have been seeking to stabilise growth, attract investment and support industrial recovery through fiscal and structural reforms. Introducing additional sugar-specific taxes now, CPPE warns, could reverse recent gains and weaken confidence among manufacturers already grappling with rising costs and uncertain demand.
