Beverage Industry Warns New Excise Regime May Undermine Nigeria’s First Policy

The Non-Alcoholic Drinks (NAD) sector has warned that proposed changes to Nigeria’s excise tax framework for sugar-sweetened beverages (SSBs) could undermine the federal government’s industrialisation agenda, weaken investor confidence, and threaten over 1.5 million jobs across the manufacturing value chain.

Speaking through the Manufacturers Association of Nigeria (MAN), the sector urged the Federal Government to maintain a coordinated and evidence-based approach to excise taxation, cautioning against provisions in the Customs and Excise Tariff etc. (Consolidation) Act (Amendment) Bill 2025, which seeks to replace the current specific excise rate of ₦10 per litre with a percentage levy based on retail prices.

According to MAN, the proposed framework risks creating policy inconsistencies with the Fiscal Policy Measures (FPM) 2026–2028 and could undermine strategic initiatives such as the Nigeria First Policy and the Nigeria Sugar Master Plan (NSMP II).

Director General of MAN, Segun Ajayi-Kadir, said the beverage sector remains one of the largest contributors to Nigeria’s manufacturing industry, accounting for about 33 per cent of manufacturing output and supporting more than 1.5 million direct and indirect jobs across production, logistics, agriculture, retail, and small businesses.

Despite operating in an environment characterised by high inflation, foreign exchange constraints, and rising energy costs, the sector has continued to contribute significantly to government revenue. Industry tax remittances rose from ₦123 billion in 2022 to ₦127 billion in 2023.

However, the association noted that manufacturers already remit between 40 and 45 per cent of gross revenues in taxes and levies, warning that additional tax burdens could further strain profitability and investment.

MAN cited projections by PwC indicating that a 10 to 20 per cent increase in excise duties could reduce the sector’s gross value. Added from ₦14.3 trillion to ₦11.5 trillion by 2030, while employment could decline from about 1.5 million jobs to 1.2 million.

While acknowledging government concerns over non-communicable diseases (NCDs), the industry argued that policy interventions should be guided by local evidence and consumption patterns.

The association maintained that Nigeria’s annual per capita sugar consumption remains relatively low at about 7.1 kilograms and that sugar-sweetened beverages account for only a small share of overall sugar intake. It further argued that NCDs are influenced by multiple factors, including lifestyle, genetics, and dietary habits, rather than beverage consumption alone.

MAN also raised concerns about what it described as increasing fragmentation within Nigeria’s fiscal framework, warning that parallel excise mechanisms could create regulatory uncertainty and complicate long-term business planning.

According to the industry, the proposed shift from an ex-factory-based excise structure to a retail price-based levy could create significant administrative and enforcement challenges for both regulators and manufacturers.

The sector further warned that higher excise taxes could trigger wider economic consequences across the value chain by reducing consumer demand, lowering production volumes, and weakening supply chains. It noted that farmers, distributors, transport operators, retailers, and informal traders would be among those most affected.

Drawing from international experiences in countries such as Mexico, South Africa, and Finland, MAN argued that poorly calibrated sugar taxes have been associated with job losses, business closures, administrative challenges, and limited public health outcomes.

The association consequently called on the Federal Government to engage the National Assembly to reconsider the proposed amendment bill, preserve the integrity of the Fiscal Policy Measures framework, and ensure greater policy coordination.

It also advocated broader stakeholder consultations and the development of a long-term excise roadmap that balances public health objectives with industrial growth, employment protection, and economic sustainability.

The latest intervention adds to growing opposition from private sector stakeholders. InsideBusiness earlier reported that the Centre for the Promotion of Private Enterprise (CPPE) criticised the Senate’s approval of the Sugar-Sweetened Beverage Tax Bill, warning that the measure could discourage investment, threaten jobs, and slow manufacturing output.

The Lagos Chamber of Commerce and Industry (LCCI) has also backed the CPPE’s position, cautioning that an unbalanced implementation of the proposed tax regime could weaken supply chains, affect employment, and place additional pressure on productive sectors of the economy.

In a statement signed by its Chief Executive Officer, Muda Yusuf, the CPPE described the proposed legislation as ill-timed and inconsistent with the Federal Government’s efforts to improve the business environment and stimulate industrial growth.