Nigeria’s beverage sector faces N2.8trn value risk over tax plans

…MAN calls for evidence-based and coordinated excise tax policy

Nigeria’s beverage sector faces a significant hit as a proposed tax hike on sugar-sweetened beverages (SSB) threatens to shave N2.8 trillion off the industry’s gross value added by 2030, according to a PwC projection.

The Manufacturers Association of Nigeria (MAN) is urging the government to adopt a more coordinated and evidence-based approach to excise taxation, warning that the proposed increase could have far-reaching consequences for the economy and employment.

The proposed tax hike, part of the Customs and Excise Tariff etc. (Consolidation) Act (Amendment) Bill 2025, would see excise duties on sugar-sweetened beverages rise from N10 per litre to a percentage levy on the retail price.

MAN argues that this could lead to job losses, reduced investment, and a decline in government revenue, as it calls for a more predictable and stable fiscal policy framework that balances public health objectives with economic growth and job creation.

“Excise increases do not operate in isolation but transmit across an interconnected value chain, affecting manufacturers, distributors, farmers, retailers, and consumers,” Segun Ajayi-Kadir, director general of MAN, warned.

“Higher taxes reduce demand, compress production volumes, and increase unit costs due to underutilised factory capacity,” he said. “This triggers a cascade of effects, including reduced agricultural off-take (especially sugarcane under NSMP II), lower logistics activity, and contraction in MSME retail sales,” he added.

According to him, small retailers and informal traders who dominate last-mile distribution are particularly vulnerable, as reduced margins and falling turnover directly affect household livelihoods.

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Kadir explained that consumers, especially low-income households who already allocate over half of their income to food, are likely to face reduced affordability and may substitute formal beverages with unregulated or unsafe alternatives, creating unintended public health risks.

The beverage sector is a significant contributor to Nigeria’s economy, employing over 1.5 million people and generating N14.3 trillion in gross value added in 2023.

However, the industry is facing significant headwinds, including high inflation, foreign exchange scarcity, and rising energy costs.

The proposed tax hike could exacerbate these challenges, making it even harder for manufacturers to operate profitably and invest in growth.

“The proposed Customs and Excise Tariff Amendment (CETA) Bill 2025 introduces a parallel excise mechanism that risks undermining the recently introduced Fiscal Policy Measures (FPM) 2026–2028 framework.”

“This framework was designed to provide predictability and stability for businesses and investors.”

MAN warned that conflicting fiscal instruments could weaken investor confidence, distort planning assumptions, and reduce the effectiveness of medium-term industrial policy frameworks such as the Nigeria First Policy and the Nigeria Sugar Master Plan (NSMP II).

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Health concerns must reflect evidence

Kadir noted that beverage manufacturers acknowledge the government’s commitment to addressing non-communicable diseases (NCDs) but emphasised that policy responses must reflect Nigeria’s specific epidemiological and consumption realities.

According to him, evidence shows that Nigeria’s per capita sugar consumption remains low at approximately 7.1kg annually, well within WHO-recommended thresholds. Beverages account for only a small fraction of household sugar intake and caloric consumption.

“Contrary to common narratives, there is no conclusive empirical evidence establishing sugar-sweetened beverages as the primary driver of NCDs in Nigeria, which are widely understood to be multi-factorial in nature, shaped by genetics, lifestyle, environment, and broader dietary patterns.”

He added that major global health frameworks, including WHO “Best Buys” and “Quick Buys,” do not classify SSB taxation as a leading cost-effective intervention for NCD reduction.