Nigeria Taxation Plan Could Harm Manufacturing Sector

The Centre for the Promotion of Private Enterprise (CPPE) has cautioned against the proposed introduction of additional taxes on sugar-sweetened non-alcoholic beverages in Nigeria, warning that such a move could harm the country’s manufacturing sector and broader economy. According to the organization, the proposal is misplaced and not supported by empirical evidence.

CPPE’s Executive Director, Dr. Muda Yusuf, noted that while public health concerns such as diabetes and cardiovascular diseases require urgent attention, the introduction of a sugar-specific tax is not the solution. The organization argued that the proposal is not aligned with Nigeria’s economic realities and is largely driven by foreign policy models.

The advocacy for sugar taxation in Nigeria is mostly inspired by global health institutions, CPPE stated, adding that global best practices do not support sugar taxation as a sustainable solution to non-communicable diseases, especially in economies like Nigeria. The think tank warned that imposing additional taxes on the sector could lead to job losses, declining household incomes, reduced investment, and setbacks to poverty-reduction efforts.

Manufacturers of non-alcoholic beverages are already burdened by multiple taxes and levies, including a 30% company income tax, 7.5% VAT, and N10 per liter excise duty. These fiscal pressures are worsened by Nigeria’s challenging operating environment, characterized by high energy costs, expensive logistics, exchange-rate volatility, and elevated interest rates.

CPPE maintained that sugar taxes offer limited benefits in isolation and that available evidence suggests they deliver minimal public health gains unless embedded within broader lifestyle and behavioral interventions. The organization identified poor overall diet quality, physical inactivity, and sedentary lifestyles as the main drivers of diabetes and other non-communicable diseases in Nigeria.

Instead of taxation, CPPE urged the government to pursue alternative approaches, such as lifestyle and nutrition education, community-based health awareness programs, promotion of physical activity, healthy food subsidies, and urban planning that supports active transportation. These measures, the organization said, directly address the underlying drivers of diabetes and cardiovascular diseases while avoiding policies that could undermine a critical pillar of Nigeria’s manufacturing and employment base.

The CPPE’s warning highlights the need for policymakers to consider the potential economic and social implications of their decisions, particularly in a country like Nigeria where the manufacturing sector plays a vital role in the economy. As the government considers its next steps, it must balance the need to address public health concerns with the need to support economic growth and development.