Sugar Tax Will Deepen Manufacturing Woes, LCCI Warns

The Lagos Chamber of Commerce and Industry (LCCI) has expressed concern over the passage of the Sugar-Sweetened Beverage (SSB) Tax Bill by the Senate.

The Director-General of the LCCI, Dr Chinyere Almona, in a statement on Monday in Lagos, said that the tax could worsen challenges facing Nigeria’s manufacturing sector.

Almona said that though the chamber supported efforts to address public health concerns associated with excessive sugar consumption, such interventions should not impose undue burdens on businesses and consumers.

She noted that manufacturers were already grappling with high energy costs, exchange rate volatility, elevated interest rates, logistics bottlenecks, multiple taxation and weak consumer purchasing power.

According to her, the introduction of additional taxes on beverage manufacturers is likely to increase production costs, which can ultimately be passed on to consumers through higher prices.

“This may further worsen inflationary pressures and reduce demand for locally manufactured products.”

The LCCI boss also said that the tax could have unintended consequences across industrial value chains, affecting suppliers, distributors, transport operators, retailers, farmers and service providers linked to the beverage industry.
She added that any decline in production volumes resulting from increased taxation could lead to lower investments, reduced capacity utilisation and potential job losses.

Almona advocated a more balanced approach that combined public health education, voluntary product reformulation, improved product labeling, consumer awareness campaigns and broader stakeholder engagement.

She noted that experiences from more advanced economies showed that similar policies were designed primarily to encourage manufacturers to reduce sugar content in products.

According to her, Nigeria’s SSB tax framework should form part of a broader public health strategy and be carefully calibrated to minimise disruption to industry and employment.
“We want to see manufacturers reformulate their products over a transition period rather than simply raise prices due to SSB taxes.

“A reformulation-focused tax may be more effective than a revenue-focused tax as it can achieve health objectives while preserving industrial activity,”
Almona also stressed the need for policymakers to assess the likely impact of the tax on agriculture, manufacturing and supply chains before implementation, especially in sectors that supported large numbers of jobs.

She urged the Federal Government and the National Assembly to undertake a redesign of the policy through wider consultations with manufacturers, health experts, organised private sector groups, consumer associations and other stakeholders.

”Such engagement will help develop a tax framework that promotes product reformulation while preserving sales, jobs and industrial competitiveness,” she said.

She added that this would ensure that public health objectives were pursued in a manner that supports sustainable industrial development and economic growth.

“We urge the Federal Government and the National Assembly to undertake a redesign exercise through more technical engagement with manufacturers, health experts, organised private-sector groups, consumer associations, and other stakeholders to birth a tax policy that drives product reformulation and preserves sales and jobs.

“This will help ensure that public health objectives are pursued in a manner that preserves economic competitiveness, jobs, and supports sustainable industrial development,” she added.