The Manufacturers Association of Nigeria (MAN) has urged the Federal Government to adopt a more coordinated, evidence-based and predictable excise tax framework for sugar-sweetened beverages (SSBs), warning that proposed changes to the tax structure could destabilise the manufacturing sector, weaken investor confidence, and trigger widespread job losses across Nigeria’s industrial value chain.
The association raised the concerns on Monday through its Director General, Segun Ajayi-Kadir, speaking on behalf of stakeholders in the Non-Alcoholic Drinks (NAD) sector.
MAN specifically cautioned against provisions in the proposed Customs and Excise Tariff etc. (Consolidation) Act (Amendment) Bill 2025, which seeks to replace the current fixed excise rate of ₦10 per litre with a percentage-based levy on retail price—an adjustment the group described as potentially disruptive to industrial planning and fiscal stability.
Manufacturing Sector Under Pressure, Yet Still Supporting National Revenue
According to the Manufacturers Association of Nigeria, the Non-Alcoholic Drinks sector remains one of the strongest pillars of Nigeria’s manufacturing ecosystem, contributing about 33% of total manufacturing output and supporting more than 1.5 million direct and indirect jobs across agriculture, packaging, logistics, retail distribution, and informal trade networks.
Despite facing severe macroeconomic headwinds—including inflationary pressures, volatile exchange rates, and rising energy costs—the sector continues to make significant contributions to government revenue.
Industry figures cited by MAN show that tax remittances rose from ₦123 billion in 2022 to ₦127 billion in 2023, reflecting continued compliance even under difficult operating conditions.
However, the association warned that the sector is already operating near its fiscal limit, with companies paying between 40% and 45% of gross revenues in combined taxes, a level it described as “borderline unsustainable” for long-term industrial survival.
A PwC (2023) projection referenced by the group further suggested that a 10–20% excise increase could reduce sectoral Gross Value Added from ₦14.3 trillion to ₦11.5 trillion by 2030, while employment could decline from 1.5 million to approximately 1.2 million jobs or lower.
Public Health Goals Supported, But Data Must Drive Policy
While acknowledging government efforts to address rising cases of non-communicable diseases (NCDs), MAN stressed that policy interventions must be grounded in Nigeria-specific evidence rather than global generalisations.
The association noted that Nigeria’s per capita sugar consumption remains relatively low at 7.1kg per year, a figure it said is still within World Health Organization (WHO) recommended thresholds.
It further argued that sugar-sweetened beverages account for only a small fraction of total dietary sugar intake in Nigeria, insisting that NCDs are driven by multiple interrelated factors including lifestyle, genetics, environment, and broader dietary habits.
MAN also maintained that global health frameworks such as the WHO “Best Buys” do not categorically present SSB taxation as the most cost-effective standalone solution for reducing NCD prevalence, particularly in developing economies with fragile manufacturing bases.
Warning Over Policy Fragmentation and Regulatory Overlap
A major concern raised by the association is what it described as increasing fragmentation in Nigeria’s fiscal policy environment, where multiple levies and tax instruments are introduced without adequate coordination or cumulative impact assessment.
MAN warned that the proposed CETA Bill 2025 could create a parallel excise structure that conflicts with the recently introduced Fiscal Policy Measures (FPM) 2026–2028 framework, designed to ensure predictability and stability for investors.
According to the association, such policy inconsistencies risk undermining long-term industrial planning, weakening investor confidence, and creating uncertainty around key national programmes such as the Nigeria First Policy and the Nigeria Sugar Master Plan II.
Legal and Administrative Concerns Over New Tax Structure
The proposed transition from a fixed excise rate to a percentage levy on retail price was described by industry stakeholders as “technically complex and administratively burdensome.”
MAN noted that Nigeria’s current excise system is based on ex-factory or ex-warehouse valuation, and shifting to retail pricing could introduce valuation disputes, enforcement challenges, and compliance inefficiencies for both regulators and manufacturers.
The association also pointed to Nigeria’s already heavy tax environment, where manufacturers are subject to VAT, corporate income tax, import duties, excise duties, and various regulatory levies—creating a cumulative burden that disproportionately affects MSMEs and smaller producers.
Economic Ripple Effects Across the Value Chain
MAN warned that excise tax increases do not operate in isolation but trigger cascading effects across Nigeria’s interconnected economy.
Higher taxes, it explained, typically reduce consumer demand, lower production volumes, and increase per-unit production costs due to underutilised manufacturing capacity.
This, in turn, affects agricultural supply chains—particularly sugarcane production under the Nigeria Sugar Master Plan II—as well as logistics operators, distributors, wholesalers, and informal retailers.
Small-scale traders and kiosks, which form the backbone of Nigeria’s last-mile distribution system, are expected to be most affected, with reduced margins threatening household incomes and informal sector stability.
Consumers, especially low-income households, may also face affordability challenges, potentially pushing them toward unregulated or unsafe substitutes, an outcome MAN described as an unintended public health risk.
Global Examples Cited as Cautionary Lessons
The association referenced international case studies to highlight potential risks of poorly designed SSB tax regimes:
Mexico recorded significant job losses and closures among small retail outlets following the introduction of its sugar tax.
South Africa reportedly experienced about 3,000 job losses across manufacturing and distribution linked to its Health Promotion Levy.
Finland has modified or rolled back sugar-related tax measures due to administrative complexity and limited measurable impact.
MAN argued that while such policies may reduce consumption in the short term, they often carry significant economic and employment trade-offs, especially in emerging markets.
Call for Policy Alignment and Structured Reform
Reaffirming its support for government revenue mobilisation and public health objectives, MAN called for a harmonised excise framework anchored on four key principles:
Predictability – ensuring stable and transparent tax policies
Proportionality – avoiding excessive fiscal pressure on industries
Minimal Distortion – preventing market disruption and informal substitution
Economic Sustainability – aligning taxation with industrial growth and job creation goals
Industry Demands Government Action
MAN urged the Federal Government, through the Ministry of Finance and relevant agencies, to:
Engage the National Assembly to prevent overlapping excise frameworks and reconsider the CETA Bill 2025
Preserve the integrity of the Fiscal Policy Measures (FPM) 2026–2028 framework
Strengthen executive coordination of excise policy for consistency and efficiency
Initiate structured consultations with stakeholders across industry and government
Develop a long-term post-2028 excise roadmap balancing health and industrial objectives
The association reiterated its commitment to working with government toward Nigeria’s economic transformation agenda but stressed that policy coherence is essential for sustainable growth.
MAN concluded that Nigeria does not need to choose between public health and industrial development, but must instead pursue a balanced, evidence-driven fiscal framework that safeguards jobs, attracts investment, and ensures long-term economic stability.
Manufacturers Association of Nigeria warns that proposed sugar-sweetened beverage excise tax reforms could harm jobs, investment, and industrial stability, calling for a coordinated and evidence-based fiscal policy framework to balance public health and economic growth.
Discover more from Ameh News
Subscribe to get the latest posts sent to your email.
