Manufacturers to come under strain with 1,200% jump in sugar tax

The Corporate Accountability and Public Participation Africa (CAPPA) recommendation for an increase in sugar-sweetened beverages (SSB) to N130 per litre from N10 per litre will further strain manufacturers already embattled with multiple taxation.

This recommendation, which follows the rising number of obesity and Type 2 diabetes among youths in the country, is aimed at controlling the saturated beverage market.

However, ThinkBusiness Africa — a think tank advocacy group – argues that not only will several local manufacturers be forced to shut down their companies as a result of the tax bill, but that the sector is already faced with taxes from the three tiers of government — local, state and federal.

At a recent convening in Lagos, Ogho Okiti, chief executive officer of ThinkBusiness, reiterated that the firm is strongly against the tax surge because it lacks sufficient data and facts.

“Dietary health is influenced by a constellation of factors—urbanisation, income, education, processed food consumption, and sedentary behaviour. Singling out SSBs is reductionist,” he said.

In May, CAPPA published a report titled, ‘Junk on Our Plates: Exposing Deceptive Marketing of Unhealthy Foods Across Seven States in Nigeria’. This report calls for four major recommendations to tackle the rising consumption of carbonated drinks, as well as the marketing strategy that it says is deceiving.

But Okiti argues with how the advocacy firm framed its health data. For instance, while the May report highlights obesity among urban women, its recommendations focus on adolescent males, whom it identifies as the top SSB consumers.

“CAPPA’s report is not grounded in strong data. It draws on selectively applied findings and contradictions. For instance, it cites obesity among urban women as the justification for tax increases, yet its field data shows adolescent males aged 15–19 consume more sugary drinks. That’s a serious gap in policy logic,” he explained.

“To say that consumption of beverages containing SSB is the cause of diabetes, hypertension, and obesity is not necessarily the case because there are other factors that contribute to these diseases,” Okiti added.

According to him, blaming only one factor and neglecting the rest is counterproductive.

Data from the Food and Agriculture Organisation shows that Nigeria’s per capita sugar consumption is roughly 8kg per year, which translates to about 21 grams per day, well within the recommended safe limits.

The CEO questioned how a tax originally implemented as a N10 per litre levy in 2022, with no publicly disclosed performance data to date, could be considered a failure, let alone one that warrants such a steep hike.

He noted that CAPPA’s recommendation on new taxes on SSB without evaluating existing ones amounts to fiscal adventurism, not policy leadership.

Over the years, manufacturers in Africa’s most populous nation have decried how the weight of multiple taxation is weighing on their businesses. In 2023, the Manufacturers Association of Nigeria reported that over 767 local companies in the country shut down on the back of multidimensional factors, including the weight of multiple taxation.

“Without businesses, there would be no jobs. Without business investments, there would be economic growth,” said Okiti, noting that a call for a 1,200 per cent surge in SSB tax will stunt the entrance of new businesses.

He stressed that local manufacturers are already burdened by multiple taxation of over 45 per cent; therefore, an additional tax is uncalled for.

ThinkBusiness calls for a more comprehensive and evidence-based approach, rather than endorsing excessive taxation as the silver bullet for public health.

It recommends strengthening enforcement of existing National Agency for Food and Drug Administration and Control regulations on labelling and trans fats, expanding nutrition education in schools, promoting physical activity, and cracking down on misleading advertising.

It further suggests that Nigeria commission a total dietary intake study to properly understand national consumption patterns.