Dare Babalola
The Centre for the Promotion of Private Enterprise (CPPE) has strongly opposed calls for an increase in taxation on sugar-sweetened beverages (SSBs), describing the proposal as ill-timed, counterproductive, and inconsistent with Nigeria’s current economic reform agenda.
In a policy brief issued on Tuesday, CPPE Chief Executive Officer, Muda Yusuf, criticised the recommendation put forward by Corporate Accountability and Public Participation Africa (CAPPA), arguing that introducing additional taxes on the beverage sector would further strain an already fragile economy.
Yusuf noted that the federal government’s ongoing tax reforms are designed to reduce the burden on businesses, improve efficiency, and stimulate investment. He warned that imposing new levies—particularly on a key manufacturing segment—would contradict these objectives and weaken investor confidence.
The CPPE highlighted the difficult operating environment facing Nigerian businesses, pointing to persistently high inflation, elevated interest rates, and surging energy costs as major challenges. According to the group, the Monetary Policy Rate currently exceeds 26.5 per cent, with lending rates rising above 30 per cent for many firms.
It added that fuel price increases—over 200 per cent for petrol and more than 70 per cent for diesel in the past two years—have significantly raised production costs, especially in industries reliant on self-generated power due to unreliable electricity supply.
Yusuf further explained that exchange rate depreciation has driven up the cost of imported raw materials, compounding the financial strain on manufacturers. Within this context, the food and beverage sector—particularly the sugar-sweetened beverage segment—has been among the hardest hit due to its heavy energy dependence.
He outlined that beverage production involves multiple energy-intensive processes, including water treatment, heating, carbonation, bottling, and cold-chain distribution, all of which have become significantly more expensive.
The CPPE stated that beverage prices and other consumer goods have risen by more than 50 per cent in the last two years, while consumer purchasing power has weakened sharply. This, it said, has resulted in declining sales volumes and increased financial pressure on manufacturers, particularly small and medium-scale operators.
“Imposing additional taxes under these conditions would amount to layering further fiscal pressure on an already distressed sector,” Yusuf warned, adding that many businesses are struggling to remain viable.
The policy group stressed that the food and beverage industry is one of the largest employers in Nigeria’s manufacturing sector and plays a critical role in supporting a wide value chain spanning agriculture, logistics, retail, and hospitality.
It cautioned that additional taxation could trigger a series of negative outcomes, including reduced production, factory closures, job losses, and disruptions to agricultural supply chains linked to beverage manufacturing.
According to the CPPE, such measures could also push more businesses into the informal sector as they attempt to survive rising operational costs.
“With unemployment and underemployment already at concerning levels, this kind of policy could worsen socio-economic conditions,” the statement noted.
While acknowledging growing concerns over non-communicable diseases such as diabetes, the CPPE argued that taxing sugar-sweetened beverages is not an effective standalone solution to public health challenges.
Yusuf maintained that health outcomes are influenced by broader lifestyle factors, including diet, physical activity, and overall consumption habits. He added that global evidence on sugar taxes shows mixed results, particularly in countries where complementary health interventions are weak.
Instead, the CPPE advocated for alternative strategies such as public health education, promotion of active lifestyles, improved access to preventive healthcare, and collaboration with industry stakeholders.
The group also warned that introducing new sector-specific taxes would contradict the government’s reform agenda, which emphasises reducing multiple taxation and creating a more business-friendly environment.
Such a move, it said, could create policy uncertainty, discourage investment, and undermine confidence in Nigeria’s manufacturing sector.
“Policy consistency is critical for sustaining economic recovery and attracting investment,” Yusuf stated.
The CPPE urged the federal government to reject the proposed tax and called on the National Assembly to halt any legislative efforts aimed at introducing additional levies on sugar-sweetened beverages.
It also appealed to public health authorities to prioritise preventive measures and awareness campaigns rather than fiscal penalties on specific industries.
The organisation concluded that at a time when businesses are grappling with rising costs, weak demand, and shrinking margins, the priority should be to support growth, protect jobs, and stabilise the economy—not impose additional tax burdens.
