By Rhoda Godwin

As Nigeria grapples with rising inflation, declining consumer purchasing power, and persistent challenges facing the manufacturing sector, fresh concerns have emerged over proposals to increase excise duties on sugar-sweetened beverages (SSBs). Industry stakeholders, led by the Manufacturers Association of Nigeria (MAN), have warned that the move could have far-reaching consequences for businesses, workers, consumers, and the broader economy.
The proposal, contained in the Customs and Excise Tariff etc. (Consolidation) Act Amendment (CETA) Bill 2025, seeks to replace the current excise duty of N10 per litre on sugar-sweetened beverages with a percentage levy tied to retail prices. While government proponents argue that the measure could boost revenue generation and support efforts to combat non-communicable diseases, manufacturers insist that the timing and structure of the proposal could do more harm than good.
At the heart of the debate is the significant role the non-alcoholic drinks sector plays in Nigeria’s economy. According to the Manufacturers Association of Nigeria, the sector accounts for about 33 per cent of the country’s manufacturing output and supports over 1.5 million direct and indirect jobs across the value chain.
From factory workers and transport operators to sugarcane farmers, distributors, retailers, and small business owners, millions of livelihoods depend on the continued growth and stability of the industry. Stakeholders argue that imposing additional tax burdens could weaken one of the few manufacturing subsectors that has remained resilient despite economic headwinds.
Director General of MAN, Segun Ajayi-Kadir, noted that manufacturers already face enormous operational costs resulting from unstable power supply, high energy expenses, foreign exchange volatility, poor infrastructure, and multiple taxation. According to him, businesses in the sector currently remit between 40 and 45 per cent of their gross revenues in various taxes and levies.
Industry experts warn that further tax increases could force manufacturers to raise product prices significantly. Such increases would inevitably be passed on to consumers who are already struggling with rising living costs.
For many Nigerians, soft drinks and other non-alcoholic beverages are affordable consumer products purchased occasionally for refreshment, celebrations, or convenience. An increase in excise duties would likely translate into higher shelf prices, making these products less affordable for average consumers.
Yet, some citizens appear resigned to the possibility of price increases.
A Lagos resident, Gloria, believes Nigerians have become accustomed to economic hardship and will continue to adjust regardless of government policies.
“Nigerians are used to discomfort; they adapt easily. Even if they increase a bottle of Coke to N700, people will still buy it,” she said.
Her comment reflects a common perception that Nigerian consumers have a remarkable capacity to adapt to rising prices. However, economists caution that resilience should not be mistaken for prosperity.
Consumer adaptation often means sacrificing spending in other areas, reducing household savings, or cutting back on essential needs. In the long term, this can weaken overall consumer demand and negatively affect economic growth.
Beyond consumers, there are fears that increased excise duties could discourage investment in the manufacturing sector. Investors generally favour stable and predictable policy environments. Frequent changes to tax structures can create uncertainty and make long-term business planning difficult.
Industry leaders argue that the proposed amendment may also conflict with the Federal Government’s recently introduced Fiscal Policy Measures (FPM) 2026–2028 framework, which seeks to provide policy stability and encourage industrial development.
They contend that introducing a new retail price-based excise system could undermine confidence in existing economic policies and send mixed signals to local and foreign investors.
Another concern relates to employment. The non-alcoholic drinks sector sustains jobs across multiple industries, including agriculture, packaging, logistics, retail, and manufacturing. If rising production costs force companies to reduce operations, workers could face layoffs while suppliers and distributors experience declining business activity.
The impact could be particularly severe for micro, small, and medium enterprises that depend heavily on beverage sales for daily revenue.
Supporters of the proposed tax increase often cite public health concerns, particularly the need to reduce non-communicable diseases such as diabetes, obesity, and cardiovascular conditions. However, manufacturers argue that available evidence does not support the notion that sugar-sweetened beverages are the primary cause of these health challenges in Nigeria.
According to industry data, Nigeria’s annual per capita sugar consumption is approximately 7.1 kilogrammes, a figure that remains within limits recommended by the World Health Organisation. Furthermore, beverages account for only a fraction of total sugar consumption, with sugar intake coming from numerous dietary sources.
Health experts generally acknowledge that non-communicable diseases result from a complex combination of factors including genetics, physical inactivity, dietary patterns, environmental influences, and lifestyle choices.
Stakeholders therefore argue that public health interventions should be comprehensive and evidence-based rather than focused disproportionately on a single product category.
There are also practical concerns regarding implementation. Nigeria’s existing excise duty system is based largely on ex-factory and ex-warehouse pricing structures. Transitioning to a retail price-based system may create administrative complexities, compliance challenges, and enforcement difficulties for both manufacturers and regulatory authorities.
Tax experts warn that ambiguities in valuation methods could increase disputes between businesses and regulators while creating opportunities for tax avoidance and market distortions.
Many analysts believe government can achieve its public health and revenue objectives through alternative measures. These include promoting public awareness campaigns on healthy lifestyles, encouraging physical activity, supporting nutrition education, and strengthening healthcare systems.
Rather than imposing additional taxes on an already heavily taxed sector, policymakers could focus on creating an environment that enables businesses to expand production, create jobs, and contribute more significantly to economic growth.
As the Federal Government seeks to balance revenue generation with economic development, stakeholders are urging authorities to engage in broader consultations before implementing any new excise regime.
The challenge lies in designing policies that protect public health without undermining industrial competitiveness, employment, and consumer welfare.
For a country striving to diversify its economy and strengthen local manufacturing, many observers believe that imposing higher excise duties on a sector responsible for one-third of manufacturing output may ultimately prove counterproductive.
The debate over sugar-sweetened beverages is therefore about more than taxes. It is about jobs, investment, industrial growth, consumer welfare, and the future direction of Nigeria’s economic policy. As discussions continue, industry operators insist that a balanced, predictable, and evidence-driven approach remains the best path forward.