Manufacturers seek for evidence-based and coordinated excise tax policy for SSBs to safeguard jobs, investment, economic stability

The Manufacturers Association of Nigeria (MAN) is heavily advocating for a balanced, evidence-based Sugar-Sweetened Beverage (SSB) tax policy and argue that ill-timed, punitive levies threaten local manufacturing jobs, investment stability, and the overall supply chain in Nigeria.

The push for a coordinated policy comes as the National Assembly recently passed an amendment to the Customs, Excise Tariff Act, while this overhaul replaces the previous flat N10 per litre excise duty with a percentage-based levy linked to retail prices to generate health promotion and disease prevention funds.

In a position statement issued by Segun Ajayi-Kadir, mni, Director General, Manufacturers Association of Nigeria on behalf of the Non-Alcoholic Drinks (NAD) sector in Nigeria, the association called on the Federal Government to maintain a balanced, evidence-based, and coordinated approach to excise taxation, warning those recent proposals to significantly increase taxes on sugar-sweetened beverages (SSBs) as contained in the Customs and Excise Tariff etc. (Consolidation) Act (Amendment (CETA) Bill 2025, which seeks to transition excise taxation on sugar-sweetened beverages (SSBs) from the current specific rate of N10/L to ‘a percentage levy of retail price’, could undermine industrial growth, job creation, investor confidence, and broader macroeconomic stability.

DG MAN reaffirmed the association’s commitment to supporting government revenue generation and public health objectives, noting that fiscal policy must remain predictable, context-specific, and grounded in empirical evidence to avoid unintended economic and social consequences.

He disclosed that the NAD sector remains one of the most resilient pillars of Nigeria’s manufacturing base, accounting for approximately 33% of manufacturing output and sustaining over 1.5 million direct and indirect jobs across production, logistics, agriculture, retail, and MSMEs.

According to him, despite severe macroeconomic headwinds, including inflation, foreign exchange scarcity, and rising energy costs, the sector continues to contribute significantly to government revenue, adding that tax remittances increased from ₦123 billion in 2022 to ₦127 billion in 2023, even as firms operate under extraordinary cost pressures.

Industry analysis indicates that companies currently remit between 40–45% of gross revenues in taxes, placing the sector near the upper threshold of sustainable taxation, stressing that many operators have recorded losses in multiple financial years, with taxes in some cases paid from capital rather than profit, raising concerns about long-term viability.

Ajayi-Kadir cited PwC (2023) projections which further indicates that a 10–20% increase in excise duties could reduce sectoral Gross Value Added from ₦14.3 trillion to ₦11.5 trillion by 2030, while also contracting employment levels from approximately 1.5 million to 1.2 million and less.

He maintained that public health concerns must reflect local evidence, adding that the sector acknowledges the government’s commitment to addressing non-communicable diseases (NCDs) but emphasized that policy responses must reflect Nigeria’s specific epidemiological and consumption realities.

“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. Furthermore, 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,” DG MAN stated.

A major concern raised by the sector, he said, is the increasing fragmentation of Nigeria’s fiscal landscape, where overlapping levies are introduced without adequate coordination or assessment of cumulative economic impact.

He also cited the proposed Customs and Excise Tariff Amendment (CETA) Bill 2025 which introduces a parallel excise mechanism that risks undermining the recently introduced Fiscal Policy Measures (FPM) 2026–2028 framework, adding that this framework was designed to provide predictability and stability for businesses and investors.

On their part, industry stakeholders have 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).

On structural ambiguities and implementation risks of this bill, MAN argued that the proposed levy structure, combining a per-litre charge with a percentage of retail price, introduces significant legal and administrative inconsistencies.

“Nigeria’s excise system is currently based on ex-factory or ex-warehouse pricing, and shifting to retail-based valuation would create enforcement challenges and administrative inefficiencies for regulators and manufacturers alike.

“Additionally, cumulative taxation across VAT, CIT, import duties, excise, and regulatory levies already places effective tax burdens above 40% for some producers, disproportionately affecting MSMEs and smaller manufacturers,” he added.

The Association contended that the Excise increases do not operate in isolation but transmit across an interconnected value chain, affecting manufacturers, distributors, farmers, retailers, and consumers.

The Association also underscored that higher taxes reduce demand, compress production volumes, and increase unit costs due to underutilized factory capacity, stressing that 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.

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

Accordingly, MAN noted 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.

References were made to international case studies which underscore the economic risks of poorly calibrated SSB taxes as follows: “Mexico recorded beverage sector job losses and closures of tens of thousands of small retail outlets following its excise implementation.

“South Africa experienced approximately 3,000 job losses across manufacturing and distribution channels after introducing its Health Promotion Levy.

“Finland rolled back sugar taxation measures due to administrative complexity and limited health impact.

“These experiences highlight that while consumption may decline temporarily, broader economic and employment consequences can be significant, particularly in developing economies.”

DG MAN reassures of the NAD sector’s support for Nigeria’s revenue mobilization and public health objectives but urges the adoption of a coordinated, predictable, and evidence-based excise framework that aligns with industrial policy goals.

MAN proposed key principles for government alignment to include: “Predictability, where stable and transparent tax regimes support long-term investment planning; Proportionality: Avoiding excessive tax burdens that exceed sectoral capacity; Minimal Distortion: Preventing unintended shifts to informal or unsafe markets; and Economic Sustainability: Ensuring alignment with industrialization and backward integration objectives.”

The sector has seriously called on the Federal Government, through the Ministry of Finance, to: “Engage the National Assembly to avoid parallel excise frameworks and ensure fiscal coherence by stepping down the proposed CETA Bill.

“Safeguard the integrity of the Fiscal Policy Measures (FPM) 2026–2028 framework to maintain policy predictability and investor confidence.

“Reinforce executive-led excise policy coordination to ensure administrative efficiency and consistency.

“Convene structured stakeholder consultations to co-develop a balanced excise framework grounded in data and economic realities.

“Develop a post-2028 excise roadmap that integrates public health objectives with industrial growth and employment protection.”

“The Manufacturers Association of Nigeria, on behalf of the Non-Alcoholic Drinks sector, remains committed to partnering with the Federal Government to advance Nigeria’s economic transformation agenda. However, sustainable progress requires policies that are coherent, evidence-based, and sensitive to Nigeria’s macroeconomic realities.

“A balanced Excise framework will ensure that Nigeria does not have to choose between public health and economic stability but can achieve both through collaboration, data-driven policymaking, and long-term vision,” DG MAN emphasized.