CPPE Urges Senate to withdraw excise duty proposed amendment on non-alcoholic beverages

The Centre for the Promotion of Private Enterprise (CPPE) has expressed concern with other stakeholders over the proposal by the Senate Committee on Finance to amend the Customs and Excise Act to increase excise duty on non-alcoholic beverages, describing it as economically disruptive, socially harmful, procedurally flawed, and inconsistent with Nigeria’s broader development and industrial policy objectives.

The Centre, in a policy brief signed by its Chief Executive Officer, Dr. Muda Yusuf, and made available to the media, said the proposal is coming at a time when manufacturers, small and medium enterprises (SMEs), distributors, and retailers across Nigeria are grappling with unprecedented macroeconomic pressures.

Dr. Yusuf posited that “the manufacturing sector—one of Nigeria’s largest job creators—continues to operate under extremely difficult conditions arising from inflation, escalating input costs, high energy prices, FX volatility, and weakened consumer demand.”

According to the Centre, over the past three years, the non-alcoholic beverage industry has absorbed significant shocks, including multiple tax adjustments and a steep rise in operating costs, adding that prices of non-alcoholic beverages have already risen by 200–300%, driven by inflationary pressures and prior excise policy changes.

“Many operators are struggling to stay afloat. SMEs—who form the backbone of the beverage value chain—face thinning margins, declining sales, and limited access to affordable financing. Introducing a new round of excise increases under these conditions will further weaken their operating capacity, reduce output, erode purchasing power and lead to avoidable job losses.

“The Nigerian economy cannot afford another wave of factory closures or layoffs at this delicate moment of recovery,” it stated.

The CEO CPPE highlighted that the proposed excise duty increase carries significant risks that extend beyond the beverage industry and warned that any additional tax on beverages will translate directly into higher retail prices.

Dr. Yusuf noted that millions of Nigerian households are already struggling with the cost of food, transportation, and basic goods, hence, further price increases will worsen welfare conditions and contribute to inflationary pressures in the consumer goods market.

The beverage industry, he argued, sustains thousands of jobs across manufacturing, supply chains, logistics, retail, and the informal sector, therefore, any contraction in production or sales will have ripple effects, precipitating job losses at a time when unemployment remains a major national challenge.

“Contrary to assumptions that higher excise rates translate to higher revenue, the opposite is more likely. When consumption declines due to price increases, revenue falls. Many countries that imposed sudden excise hikes on similar products later recorded revenue shortfalls due to reduced sales volumes.

“SMEs involved in production, distribution, and retail will be hit the hardest. Many may be forced out of business, deepening poverty and reducing economic participation,” he added.

He explained that there are worrying procedural inconsistencies surrounding the proposal that raise fundamental governance questions which include: “Excise tax policy falls under the portfolio of the Minister of Finance and Coordinating Minister of the Economy, yet the proposal appears to be spearheaded by the Senate Committee on Finance and the Minister of Health.

“Critical Senate Committees—including Industry, Customs, and Trade & Investment—were not fully engaged.

“There is limited evidence of inter-ministerial consultation, economic impact assessment, or stakeholder engagement.

“This lack of coordination undermines the credibility of Nigeria’s fiscal policy architecture and risks sending negative signals to domestic and foreign investors at a time when investor confidence must be strengthened, not weakened.”

CPPE highlighted health concerns about excessive sugar consumption as understandable, but noted that focusing taxation efforts solely on non-alcoholic beverages creates a narrow and inequitable framework.

He maintained that Sugar intake in Nigeria is driven by a variety of products including: Pastries and bread; Confectionery; Milk beverages; Baby foods; and Carbohydrate-heavy staples.

He declared that a holistic public health strategy should therefore include: Nationwide nutrition and lifestyle education; Improved labeling of food products; Support for physical activity campaigns; as well as Voluntary industry-led sugar reduction initiatives.

Global evidence, it stated, shows that behavioural change—not punitive taxation—is the most sustainable path to improved health outcomes.

CPPE affirmed that after thorough review and consultation with industry stakeholders, economic experts, and public policy analysts, they agreed that the proposed increase in excise duty on non-alcoholic beverages should be discontinued, adding that the current economic realities render the proposal counterproductive and potentially harmful to national economic recovery and the welfare of the people.

The Centre opined that excise policy rate-setting should remain an administrative function, not legislated into the Customs and Excise Act, stressing that fiscal tools must remain flexible and responsive to prevailing macroeconomic conditions.

It insisted that the Government should prioritise broader public health strategies rather than using taxation as the primary tool, noting that Nutrition education and awareness campaigns are more effective and less socially disruptive.

The Centre harped on stronger government–industry collaboration, and averred that manufacturers are willing partners in promoting health-conscious consumer choices, including the production of low-sugar and zero-sugar variants.

It urged the Senate Committee on Finance to reconsider the proposal in light of its potential economic, social, and institutional consequences, while the Presidency and Federal Ministry of Finance should reaffirm the role of the executive in setting excise duty rates and ensuring coherence across fiscal policy domains.

Dr Yusuf called on the Federal Ministry of Health to work collaboratively with manufacturers, civil society, and nutrition experts on non-tax health interventions, while industry stakeholders should show commitment to responsible advertising, voluntary sugar reduction programmes, and consumer awareness campaigns.

“Nigeria is currently navigating a fragile economic recovery pathway. The manufacturing sector, a vital engine of employment and growth, needs policies that support stability, competitiveness, and resilience. The proposed increase in excise duty on non-alcoholic beverages threatens to undermine these objectives, jeopardizing livelihoods, welfare, investment, and long-term industrial development.

“In the interest of economic stability, job protection, and sound public health strategy, we strongly urge the withdrawal of the proposed amendment.

“A collaborative, evidence-based, and economically sensitive approach remains the best path forward for both public health and Nigeria’s manufacturing competitiveness,” Dr. Yusuf emphasized.