Nigerian manufacturers face new threat from proposed sugar tax, says CPPE

The Centre for the Promotion of Private Enterprise (CPPE) has warned that the proposed sugar tax poses a new threat to Nigerian manufacturers, who are already grappling with numerous challenges.

Muda Yusuf, chief executive officer of the CPPE, noted that while public health challenges such as diabetes and cardiovascular diseases undoubtedly warrant urgent attention, the proposal of a sugar-specific tax is misplaced, economically risky, and weakly supported by empirical evidence.

Yusuf, who stated this in a note titled ‘Sugar Tax: Detrimental to the Nigerian Manufacturing Sector,’ explained that advocacy for sugar taxation in Nigeria is largely driven by externally derived policy templates, particularly those associated with global health institutions.

Yusuf emphasized that the food and beverage sector remains the backbone of Nigeria’s manufacturing industry, noting that it supports millions of livelihoods across various sectors, including farming, processing, packaging, logistics, wholesale and retail trade, and hospitality.

He noted that any policy that weakens the food &beverage ecosystem would have a far-reaching consequence, including job losses, lower household incomes and reduced investment.

Read also: Sugar tax will hurt manufacturing, jobs –  CPPE

According to him, manufacturers in the non-alcoholic beverage subsector are already facing heavy fiscal and cost pressures.

“Manufacturers of non-alcoholic beverages are among the most heavily taxed and cost-pressured businesses in the Nigerian economy,” Yusuf said.

“Their fiscal pressures are further compounded by Nigeria’s challenging operating environment, including high energy costs, prohibitive logistics expenses, exchange-rate volatility, and elevated interest rates,” he explained.

“The cumulative effect has been rising production costs, shrinking margins, subdued investment appetite, and higher consumer prices,” he added.

Yusuf questioned the effectiveness of sugar taxes in addressing the root causes of non-communicable diseases in Nigeria.

He urged policymakers to prioritise evidence-based, inclusive, and development-friendly alternatives, including lifestyle and nutrition education, community-based health awareness programmes, promotion of physical activity and exercise, and encouragement of fruit and vegetable consumption, among others.

Josephine Okojie-Okeiyi is a journalist with over five years’ reporting experience. She writes on industry, agriculture, commodities, climate change, and environmental issues. She is fellow of Thomson Reuters Foundation and Bloomberg Media Initiative for Africa.

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