The Manufacturers Association of Nigeria, on behalf of the Non-Alcoholic Drinks (NAD) sector in Nigeria has called on the Federal Government to maintain a balanced, evidence-based, and coordinated approach to excise taxation, warning that 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.

While reaffirming its commitment to supporting government revenue generation and public health objectives, the sector emphasized that fiscal policy must remain predictable, context-specific, and grounded in empirical evidence to avoid unintended economic and social consequences.

A Sector Under Pressure but Still Anchoring Industrial Growth
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.

Despite severe macroeconomic headwinds, including inflation, foreign exchange scarcity, and rising energy costs, the sector continues to contribute significantly to government revenue. 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. 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.
PwC (2023) projections further indicate 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.

Public Health Concerns Must Reflect Local Evidence
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.

Concerns Over Policy Fragmentation and Regulatory Inconsistency
A major concern raised by the sector is the increasing fragmentation of Nigeria’s fiscal landscape, where overlapping levies are introduced without adequate coordination or assessment of cumulative economic impact.
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.
Industry stakeholders warn 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).

Structural Ambiguities and Implementation Risks
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.

Economic Ripple Effects Across the Value Chain
Excise increases do not operate in isolation but transmit across an interconnected value chain, affecting manufacturers, distributors, farmers, retailers, and consumers.
Higher taxes reduce demand, compress production volumes, and increase unit costs due to underutilized factory capacity. 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.
Small retailers and informal traders who dominate last-mile distribution are particularly vulnerable, as reduced margins and falling turnover directly affect household livelihoods.
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.

Global Experience Reinforces Caution
International case studies underscore the economic risks of poorly calibrated SSB taxes:
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.

Call for a Coordinated and Growth-Friendly Fiscal Framework
The NAD sector reaffirmed its support for Nigeria’s revenue mobilization and public health objectives but urged the adoption of a coordinated, predictable, and evidence-based excise framework that aligns with industrial policy goals. Key principles proposed for government alignment 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

Industry Request to Government
The sector earnestly calls on the Federal Government, through the Ministry of Finance, to:

i. Engage the National Assembly to avoid parallel excise frameworks and ensure fiscal coherence by stepping down the proposed CETA Bill.
ii. Safeguard the integrity of the Fiscal Policy Measures (FPM) 2026–2028 framework to maintain policy predictability and investor confidence.
iii. Reinforce executive-led excise policy coordination to ensure administrative efficiency and consistency.
iv. Convene structured stakeholder consultations to co-develop a balanced excise framework grounded in data and economic realities.
v. Develop a post-2028 excise roadmap that integrates public health objectives with industrial growth and employment protection.

Conclusion
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.