CPPE slams Senate over proposed hike in excise duty on non-alcoholic beverages

By : Joesph Chibueze

Date: 1 December 2025 1:54pm WAT

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CPPE Director, Dr. Muda Yusuf

CPPE Director, Dr. Muda Yusuf

The Centre for the Promotion of Private Enterprise (CPPE) has described the proposal by the Senate Committee on Finance to amend the Customs and Excise Act to increase excise duty on non-alcoholic beverages as economically disruptive, socially harmful, procedurally flawed, and inconsistent with Nigeria’s broader development and industrial policy objectives.

The Centre, in a policy brief signed by its Chief Executive Officer, Dr. Muda Yusuf, and made available to the media on Monday, said the proposal is coming at a time when manufacturers, small and medium enterprises (SMEs), distributors, and retailers across Nigeria are grappling with unprecedented macroeconomic pressures.

According to CPPE, “The manufacturing sector, one of Nigeria’s largest job creators, continues to operate under extremely difficult conditions arising from inflation, escalating input costs, high energy prices, FX volatility, and weakened consumer demand.”

It said over the past three years, the non-alcoholic beverage industry has absorbed significant shocks, including multiple tax adjustments and a steep rise in operating costs, noting that prices of non-alcoholic beverages have already risen by 200–300 per cent, driven by inflationary pressures and prior excise policy changes.

“Many operators are struggling to stay afloat,” it said, adding, “SMEs—who form the backbone of the beverage value chain—face thinning margins, declining sales, and limited access to affordable financing. Introducing a new round of excise increases under these conditions will further weaken their operating capacity, reduce output, erode purchasing power and lead to avoidable job losses.

“The Nigerian economy cannot afford another wave of factory closures or layoffs at this delicate moment of recovery.”

The Centre said the proposed increase in excise duty carries significant risks that extend beyond the beverage industry.

It said that any additional tax on beverages will be passed directly onto consumers in higher retail prices. “For millions of Nigerian households already struggling with the cost of food, transportation, and basic goods, further price increases will worsen welfare conditions and contribute to inflationary pressures in the consumer goods market,” said CPPE.

Other implications of the increase, according to the Centre, include a threat to jobs and livelihoods, a decline in government revenue, and increased pressure on small businesses.

CPPE also observed that there are worrying procedural inconsistencies surrounding the proposal that raise fundamental governance questions.

It said excise tax policy falls under the portfolio of the Minister of Finance and Coordinating Minister of the Economy, yet the proposal appears to be spearheaded by the Senate Committee on Finance and the Minister of Health.

“Critical Senate Committees, including Industry, Customs, and Trade & Investment, were not fully engaged.

“There is limited evidence of inter-ministerial consultation, economic impact assessment, or stakeholder engagement,” it said, noting that this lack of coordination undermines the credibility of Nigeria’s fiscal policy architecture and risks sending negative signals to domestic and foreign investors at a time when investor confidence must be strengthened, not weakened.

“While concerns about excessive sugar consumption are understandable, focusing taxation efforts solely on non-alcoholic beverages creates a narrow and inequitable framework,” CPPE said.

It noted that sugar intake in Nigeria is driven by a variety of products, including pastries and bread, confectionery, milk beverages, baby foods, as well as carbohydrate-heavy staples. “A holistic public health strategy should therefore include nationwide nutrition and lifestyle education,” it said.

“After thorough review and consultation with industry stakeholders, economic experts, and public policy analysts, we take the position that: the proposed increase in excise duty on non-alcoholic beverages should be discontinued.

“The current economic realities render the proposal counterproductive and potentially harmful to national economic recovery and the welfare of the people; excise policy rate-setting should remain an administrative function, not legislated into the Customs and Excise Act.

“Fiscal tools must remain flexible and responsive to prevailing macroeconomic conditions; government should prioritise broader public health strategies rather than using taxation as the primary tool. Nutrition education and awareness campaigns are more effective and less socially disruptive; stronger government–industry collaboration is essential. Manufacturers are willing partners in promoting health-conscious consumer choices, including the production of low-sugar and zero-sugar variants.”

It said the Senate Committee on Finance should reconsider the proposal in light of its potential economic, social, and institutional consequences. It also called on the Presidency and Federal Ministry of Finance to reaffirm the role of the executive in setting excise duty rates and ensuring coherence across fiscal policy domains.

CPPE called on the Federal Ministry of Health to work collaboratively with manufacturers, civil society, and nutrition experts on non-tax health interventions, while industry stakeholders should recommit to responsible advertising, voluntary sugar reduction programmes, and consumer awareness campaigns.

“Nigeria is currently navigating a fragile economic recovery pathway. The manufacturing sector, a vital engine of employment and growth, needs policies that support stability, competitiveness, and resilience. The proposed increase in excise duty on non-alcoholic beverages threatens to undermine these objectives, jeopardising livelihoods, welfare, investment, and long-term industrial development.

“In the interest of economic stability, job protection, and sound public health strategy, we strongly urge the withdrawal of the proposed amendment.

“A collaborative, evidence-based, and economically sensitive approach remains the best path forward for both public health and Nigeria’s manufacturing competitiveness,” CPPE concluded.

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