The Centre for the Promotion of Private Enterprise (CPPE) has issued a strong warning against a proposed government plan to increase taxes on soft drinks and other non-alcoholic beverages. The organisation argues that such a move, intended to generate revenue and address public health concerns, could instead derail Nigeria's fragile economic recovery by worsening inflation and leading to significant job losses across multiple sectors.
Manufacturers Already Under Severe Strain
In a statement released recently, Dr Muda Yusuf, Director of the CPPE, emphasised that the proposal comes at an exceptionally difficult time for businesses. He pointed out that manufacturers, small and medium-sized enterprises (SMEs), distributors, and retailers are already grappling with a harsh economic environment.
This environment is characterised by high inflation, skyrocketing production costs, severe foreign exchange volatility, crippling energy prices, and weak consumer spending power. The manufacturing sector, which is one of the nation's largest employers, is under significant pressure, and an additional tax burden could push many companies over the edge.
Dr Yusuf revealed that beverage prices have already surged by an alarming 200 to 300 percent in recent years, driven largely by inflation and previous tax adjustments. This has left numerous producers, especially SMEs, struggling to remain operational. Imposing a higher excise duty now could force reductions in production, erode consumers' already diminished purchasing power, and ultimately trigger factory closures and layoffs.
Broader Economic and Social Consequences
The CPPE director outlined several negative outcomes that could stem from the tax hike. Firstly, any increase would directly translate to higher market prices for consumers who are already battling rising costs for food, transport, and other essential goods. This would add more fuel to Nigeria's persistent inflation crisis.
Secondly, the beverage industry supports a vast value chain that provides thousands of jobs in manufacturing, logistics, trading, and the informal sector. A contraction in this sector due to reduced demand and production would inevitably worsen the country's unemployment situation. Yusuf argued that the policy might be counterproductive for government revenue as well, as reduced output and weaker sales could lead to lower overall tax collection, not higher.
The organisation also raised concerns about the policy formulation process. Noting that excise administration traditionally falls under the Federal Ministry of Finance, the CPPE observed that the current drive appears to be led largely by the Senate Committee on Finance and the Ministry of Health, with limited engagement of relevant committees or industry stakeholders. This approach risks undermining policy consistency and damaging investor confidence.
Calls for a More Comprehensive Strategy
While acknowledging the public health concerns related to excessive sugar intake, the CPPE stated that focusing a tax hike solely on non-alcoholic beverages is not equitable. Dr Yusuf noted that sugar consumption in Nigeria is widespread, cutting across many everyday products like bread, pastries, milk-based drinks, and various carbohydrate staples.
Instead of punitive taxes, the CPPE recommends a more holistic public health strategy. This should prioritise nutrition education, clearer food labelling, lifestyle awareness campaigns, and voluntary, industry-led sugar reduction programmes. The organisation believes that fostering behavioural change will be more effective in the long term than imposing taxes that could cripple an important economic sector.
Following consultations, the CPPE has called for the proposed excise increase to be withdrawn entirely. It advised that excise rate-setting should remain a flexible administrative function and urged the government to focus on the broader public health interventions mentioned. The organisation also encouraged increased collaboration between the government and manufacturers to promote low-sugar and zero-sugar options, alongside responsible advertising and consumer awareness initiatives.
Dr Yusuf stressed that the manufacturing sector desperately needs stable and supportive policies to foster growth and investment, not additional tax pressures that could harm jobs, investment, and Nigeria's long-term economic competitiveness. He urged the Senate Committee on Finance, the Presidency, and the Ministry of Finance to review the proposal carefully and ensure better alignment across all fiscal policies.
