CPPE Warns Sugar Tax Could Hurt Nigerian Industry, Urges Health-Focused Solutions Instead

The Centre for the Promotion of Private Enterprise warns that a sugar tax on beverages could damage Nigeria’s manufacturing sector and jobs, urging lifestyle-based health interventions instead.

CPPE Warns Sugar Tax May Harm Local Industry, Calls for Health-Focused Solutions

The Centre for the Promotion of Private Enterprise (CPPE) has cautioned the Federal Government and policymakers against introducing additional taxes on sugar-sweetened beverages, warning that such a move could weaken Nigeria’s manufacturing base and threaten thousands of jobs.

In a statement issued on Wednesday, CPPE’s Chief Executive Officer, Dr. Muda Yusuf, argued that while the rising prevalence of diabetes and cardiovascular diseases in Nigeria is a serious public health concern, imposing a sugar tax is not the most effective or sustainable solution. He said available evidence shows that sugar taxes deliver only limited health benefits unless they are combined with broader lifestyle and behavioral interventions.

“While taxation may marginally influence consumption patterns, it does not address the root causes of these diseases,” Yusuf said. “The economic costs of additional taxes, however, are immediate, tangible, and potentially severe.”

According to the CPPE, the major drivers of diabetes and related non-communicable diseases in Nigeria are poor diet quality, physical inactivity, sedentary lifestyles, urban design challenges, and genetic factors. The organisation stressed that these structural and social issues cannot be solved through taxation alone.

Instead of introducing a sugar levy, the CPPE urged the government to adopt a more holistic and preventive public health strategy. The group recommended lifestyle and nutrition education, community-based health awareness campaigns, promotion of physical activity and exercise, encouragement of fruit and vegetable consumption, healthy food subsidies, and urban planning that supports walking and cycling.

“These measures directly address the underlying drivers of diabetes and cardiovascular diseases,” Yusuf said. “They deliver broader social benefits and avoid undermining a critical pillar of Nigeria’s manufacturing and employment base.”

Economic Risks of Sugar Tax
The CPPE described recent calls for additional taxes on sugar-sweetened non-alcoholic beverages as “misplaced, economically risky, and weakly supported by empirical evidence.” While acknowledging the urgency of tackling lifestyle-related diseases, Yusuf warned that sugar taxation does not reflect Nigeria’s prevailing structural, social, and macroeconomic realities.

Nigeria’s economy, he noted, is currently battling high inflation, weak consumer purchasing power, volatile exchange rates, and a fragile industrial recovery. Introducing new taxes under such conditions could worsen economic stress on both businesses and consumers.

He further argued that advocacy for sugar taxes in Nigeria appears to be driven largely by “externally derived policy templates,” pointing out that global best practice does not support sugar taxation as a sustainable or standalone solution to non-communicable diseases—especially in developing economies.

“Public health policy must be contextual,” Yusuf said. “What works in advanced economies with strong social safety nets and resilient industries may not be appropriate for a country still struggling with inflation, unemployment, and industrial fragility.”

A Backbone of Manufacturing
The CPPE emphasized that the food and beverage sector is the backbone of Nigeria’s manufacturing industry. Citing data from the National Bureau of Statistics, the organisation said the sector contributes about 40 percent of total manufacturing output in the country.

Within this ecosystem, the non-alcoholic beverages sub-sector plays a crucial role in industrial growth, employment generation, and value creation. The sector sustains an extensive value chain that includes farmers, agro-input suppliers, processors, packaging companies, logistics providers, wholesalers, retailers, and the hospitality industry.

“Millions of livelihoods across the country depend on this value chain,” the statement said. “Policies that undermine the sector could trigger job losses, reduced household incomes, falling investment, and setbacks to poverty reduction.”

The CPPE warned that any policy that raises production costs or reduces consumer demand could ripple across this entire chain, affecting not only manufacturers but also farmers, transporters, and small retailers who depend on beverage distribution for survival.

Already Overburdened by Taxes
Yusuf also highlighted that beverage manufacturers are already among the most heavily taxed businesses in Nigeria. Existing obligations include:

• 30 percent Company Income Tax
• 7.5 percent Value Added Tax (VAT)
• ₦10 per litre excise duty
• 4 percent National Development Levy
• 4 percent FOB levy on imported inputs
• Import duties of 5–15 percent on raw materials
• 0.5 percent ECOWAS levy
• Property taxes and multiple state and local government levies

These fiscal burdens, he said, are compounded by high energy costs, expensive logistics, exchange rate volatility, and elevated interest rates. The result is rising production costs that are ultimately passed on to consumers.

According to Yusuf, retail prices of many non-alcoholic beverages have already risen by about 50 percent in the past two years—even without any new tax measures. Introducing a sugar-specific tax would further inflate prices, reduce demand, and pressure manufacturers to cut costs, often through downsizing.

“This is not the right time to impose additional sector-specific taxes,” he warned. “The economy is still in a delicate recovery phase. A sugar tax now could reverse recent industrial gains and weaken employment.”

Balancing Health and Growth
The CPPE concluded that public health objectives and economic growth are not mutually exclusive. Instead, they should be pursued through balanced, holistic, and development-conscious policymaking.

The organisation urged the government to see the fight against diabetes and cardiovascular diseases as a long-term social challenge that requires education, behavioral change, and structural reforms—not just fiscal tools.

“Health outcomes improve most sustainably when people are empowered to make better lifestyle choices in supportive environments,” Yusuf said. “This requires investment in awareness, infrastructure, and community engagement—not punitive taxation that risks harming industry and livelihoods.”

As Nigeria confronts rising healthcare costs and an increasing burden of non-communicable diseases, the CPPE’s position adds a critical economic dimension to the debate. The group’s warning suggests that policymakers must tread carefully, ensuring that efforts to improve public health do not inadvertently undermine the very industries that sustain jobs, incomes, and economic stability.