Additional Sugar Tax Risky For Nigeria’s Economy, CPPE Cautions

The Centre for the Promotion of Private Enterprise (CPPE) has warned that renewed calls for the introduction of an additional tax on sugar-sweetened non-alcoholic beverages could pose serious economic risks to Nigeria, particularly by undermining investment and employment in the manufacturing sector.

CPPE said while public health concerns such as the rising incidence of diabetes and cardiovascular diseases deserve urgent policy attention, imposing a sugar-specific tax is a misplaced response that could worsen existing economic pressures without delivering meaningful health benefits.

The private sector think tank noted that Nigeria’s food and beverage industry, especially the non-alcoholic beverages segment, remains the backbone of the manufacturing sector, contributing about 40 per cent of total manufacturing output, according to data from the National Bureau of Statistics (NBS).

CPPE warned that policies that weaken this sector would have far-reaching consequences for industrial output, job creation and household incomes.

“The food and beverage industry supports an extensive value chain involving farmers, agro-input suppliers, processors, packaging firms, logistics providers, wholesalers, retailers and hospitality operators,” CPPE said.

“Any additional fiscal burden on this sector risks job losses, reduced investment appetite and setbacks to poverty-reduction efforts.”

CPPE stressed that manufacturers of non-alcoholic beverages are already among the most heavily taxed businesses in the Nigerian economy.

Existing obligations include a 30 per cent Company Income Tax, 7.5 per cent Value-Added Tax, N10 per litre excise duty, a 4 per cent National Development Levy, a 4 per cent free-on-board levy on imported inputs, import duties ranging from 5 to 15 per cent on intermediate raw materials, a 0.5 per cent ECOWAS levy, as well as multiple state and local government charges.

These fiscal pressures, the group said, are compounded by high energy costs, expensive logistics, exchange-rate volatility and elevated interest rates, leading to rising production costs and squeezed margins.

CPPE added that retail prices of many non-alcoholic beverages have already risen by about 50 per cent over the past two years, significantly reducing affordability for consumers even without the introduction of new taxes.

On the public health argument, CPPE maintained that evidence from global and local studies suggests that sugar taxes deliver limited benefits when implemented in isolation.

It argued that Nigeria’s growing burden of non-communicable diseases is driven largely by broader lifestyle and structural factors, including poor diet quality, physical inactivity, sedentary urban living and genetic predispositions.

“While taxation may marginally influence consumption patterns, it does not address the root causes of diabetes and cardiovascular diseases,” CPPE said, warning that the economic costs of additional taxation, higher prices, weaker, demand, job losses and declining investment, would be immediate and potentially severe.

As an alternative, the organisation urged policymakers to adopt more sustainable and development-friendly approaches, such as lifestyle and nutrition education, community-based health awareness programmes, promotion of physical activity, encouragement of fruit and vegetable consumption, healthy food subsidies and urban planning that supports walking and cycling.

According to CPPE, these measures would deliver broader social benefits while preserving the productive capacity of a sector that is critical to Nigeria’s industrialisation and employment objectives.

“ Nigeria’s economy is still in a fragile recovery phase,” CPPE said. “Introducing additional sugar-specific taxes at this time risks reversing recent industrial gains and undermining ongoing efforts to create a manufacturing-friendly fiscal environment.”

CPPE’s Chief Executive Officer, Dr. Muda Yusuf noted that public health goals and economic growth are not mutually exclusive, stressing the need for balanced, evidence-based policymaking rather than additional fiscal pressure on one of Nigeria’s most important manufacturing subsectors.