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Manufacturers Seek Coordinated, Evidence-based Excise Tax On Sugary Drinks

Olushola Bello by Olushola Bello
9 minutes ago
in Business
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Representing the Non-Alcoholic Drinks (NAD) sector, the Manufacturers Association of Nigeria (MAN), has urged the federal government to adopt a balanced and evidence-driven approach to excise taxation.

The Association expressed concern over proposals to significantly increase taxes on sugar-sweetened beverages (SSBs) as outlined in the Customs and Excise Tariff etc. (Consolidation) Act (Amendment) Bill 2025.

This bill suggests changing the current specific rate of N10 per litre to a percentage-based levy on retail prices, a move that could have serious implications for industrial growth, job creation, and overall economic stability.

The director-general of MAN, Segun Ajayi-Kadir highlighted that the Non-Alcoholic Drinks (NAD) sector plays a crucial role in Nigeria’s manufacturing landscape, contributing 33 percent of manufacturing output and generating over 1.5 million direct and indirect jobs across various sectors, including production, logistics, agriculture, retail, and MSMEs.

He noted that the shift could result in a reduction in sectoral Gross Value Added from N14.3 trillion to N11.5 trillion by 2030, potentially impacting employment levels by decreasing jobs from 1.5 million to 1.2 million.

He appealed to the government to reassess the CETA Bill, advocating for the protection of the FPM 2026-2028 framework to promote industrial growth and bolster investor confidence.

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Despite facing significant challenges such as inflation and rising energy costs, the sector has shown resilience, with tax remittances increasing from N123 billion in 2022 to N127 billion in 2023.

Ajayi-Kadir noted that many firms are currently taxed at a rate between 40 to 45 percent of their gross revenues, which is approaching the upper limit of sustainable taxation, saying that some operators have even reported financial losses, resulting in taxes being paid from capital rather than profits, raising concerns about long-term sustainability.

Ajayi-Kadir cited projections from PwC (2023), stating that a 10-20 percent increase in excise duties could lead to a substantial decline in sectoral Gross Value Added and further employment contraction.
“A significant issue highlighted by industry stakeholders is the increasing fragmentation of Nigeria’s fiscal landscape, characterized by overlapping levies that lack proper coordination and assessment of their combined economic impact. This situation poses a risk to investor confidence and may distort planning assumptions, diminishing the effectiveness of important industrial policy frameworks like the Nigeria First Policy and the Nigeria Sugar Master Plan (NSMP II),” he said.
According to him, international case studies reinforce these concerns. For instance, Mexico faced job losses and the closure of numerous small retail outlets following the implementation of its excise tax. Similarly, South Africa experienced approximately 3,000 job losses within the manufacturing and distribution sectors after introducing its Health Promotion Levy. Finland even reversed its sugar taxation measures due to administrative complexities and limited public health benefits.
“These experiences underscore the importance of carefully considering the broader economic and employment impacts of taxation policies, especially in developing economies, where the consequences of such measures can be profound. By taking a thoughtful and coordinated approach, Nigeria can not only enhance its tax framework but also ensure sustainable growth and stability in the manufacturing sector.”

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Olushola Bello

Olushola Bello

Olushola Bello is a Senior Journalist at Leadership Newspaper, reporting on Nigeria's capital market, industry sectors, and broader economic issues. She is known for high-impact stories and in-depth analysis on business developments and financial markets, underpinned by strong editorial judgement and a commitment to accuracy and fairness.

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