Sugar tax threatens manufacturing sector — CPPE

The Centre for the Promotion of Private Enterprises (CPPE) yesterday warned that the introduction of a sugar tax on sugar-sweetened non-alcoholic beverages could have damaging consequences for Nigeria’s manufacturing sector, employment, and overall economic recovery.  The Chief Executive Officer (CPPE), Muda Yusuf, in a statement on Wednesday, expressed concern over renewed calls in some quarters […]

The Centre for the Promotion of Private Enterprises (CPPE) yesterday warned that the introduction of a sugar tax on sugar-sweetened non-alcoholic beverages could have damaging consequences for Nigeria’s manufacturing sector, employment, and overall economic recovery. 

The Chief Executive Officer (CPPE), Muda Yusuf, in a statement on Wednesday, expressed concern over renewed calls in some quarters for the imposition of additional taxes on sugar-sweetened beverages, arguing that such a policy is ill-suited to Nigeria’s current economic realities.

He acknowledged the growing public health challenges posed by diabetes and other non-communicable diseases.

Yusuf said a sugar-specific tax would be economically risky, weakly supported by evidence, and poorly contextualised within Nigeria’s structural and macroeconomic environment.

“While public health challenges such as diabetes and cardiovascular diseases undoubtedly warrant urgent attention, the proposition of a sugar-specific tax is misplaced, economically risky, and weakly supported by empirical evidence.

“More importantly, it is not adequately contextualised within Nigeria’s prevailing structural, social, and macroeconomic realities,” he said

Yusuf noted that advocacy for sugar taxation in Nigeria is largely driven by externally derived policy templates, adding that global experience does not support sugar tax as a sustainable or standalone solution to public health challenges, particularly in developing economies.

He described the food and beverage industry as the backbone of Nigeria’s manufacturing sector, citing data from the National Bureau of Statistics which show that the sector accounts for about 40 per cent of total manufacturing output.

According to him, the non-alcoholic beverages sub-sector plays a critical role in employment generation, value creation and industrial growth.

Yusuf said the industry supports a vast value chain involving farmers, agro-input suppliers, processors, packaging firms, transporters, distributors, retailers and hospitality businesses, collectively sustaining millions of livelihoods across the country.

He warned that any policy that weakens the sector could lead to job losses, reduced household incomes, lower investment and setbacks to poverty-reduction efforts.

The CPPE CEO also pointed out that beverage manufacturers are already among the most heavily taxed businesses in Nigeria, facing multiple fiscal obligations including company income tax, value-added tax, excise duties, development levies, import duties, and various state and local government charges.

“An Already Overburdened Industry, Manufacturers of non-alcoholic beverages are among the most heavily taxed and cost-pressured businesses in the Nigerian economy. Existing fiscal obligations include:

“30% Company Income Tax, 7.5% Value-Added Tax (VAT), N10 per litre excise duty, 4% National Development Levy on assessable profits, 4% FOB levy on imported inputs, Import duties of 5–15% on intermediate raw materials, 0.5% ECOWAS levy Property taxes at sub-national levels, Multiple state and local government levies

“These fiscal pressures are further compounded by Nigeria’s challenging operating environment, including high energy costs, prohibitive logistics expenses, exchange-rate volatility, and elevated interest rates. The cumulative effect has been rising production costs, shrinking margins, subdued investment appetite, and higher consumer prices,” Yusuf said

He added that the cumulative effect has been rising production costs, shrinking profit margins and higher consumer prices.

He also disclosed that retail prices of many non-alcoholic beverages have already risen by about 50 per cent in the last two years, even without the introduction of any new sugar-related tax.