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Nigeria is navigating one of the most fragile economic transitions in its recent history. Inflation remains elevated, food prices continue to climb, the naira has lost more than 80 percent of its value in barely two years, and consumer purchasing power is weaker than at any point since 2016.
At the same time, the Federal Government is attempting to restore credibility to the nation’s fiscal structure through a coordinated and data-driven process led by the Presidential Fiscal Policy and Tax Reform Committee. This reform effort seeks to streamline Nigeria’s fragmented tax system, expand the tax base responsibly, and design an excise architecture that supports both public health and economic sustainability.
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It is precisely at such a delicate moment that policy coherence becomes indispensable. Unfortunately, the Senate’s proposed amendment to the Customs and Excise Tariff, Etc.
Act threatens to fracture that coherence. The amendment introduces a “20 percent levy per litre of retail price” on certain products, a clause that tax lawyers, economists, and manufacturers unanimously describe as mathematically contradictory, legally inconsistent, and practically impossible to administer.
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Even more problematic is the attempt to base excise calculations on retail prices, a metric that lies far outside the administrative reach of the Nigeria Customs Service, whose mandate begins and ends at the factory gate or point of importation, not in millions of micro-retail outlets across the country.
The amendment does not only raise technical concerns; it risks destabilising one of the few manufacturing subsectors still anchoring Nigeria’s industrial economy. The non-alcoholic drinks sector, which the amendment appears to target most directly, contributes nearly one-third of total manufacturing output and sustains about 1.5 million direct and indirect jobs.
Despite severe macroeconomic pressures, it remains a major source of government revenue: taxes paid by the sector increased from ₦123 billion in 2022 to ₦127 billion in 2023, even as many firms recorded losses due to rising foreign exchange costs and inflation-driven input spikes.
Today, companies in the sector face a total fiscal burden, comprising Corporate Income Tax (CIT), excise duties, VAT, import duties on inputs, regulatory levies, and compliance costs, that amounts to between 40 and 45 percent of gross revenues.
This represents the aggregate tax load borne across the value chain. At this level of effective taxation, the sector is nearing the point where additional fiscal pressure is more likely to shrink the tax base, through reduced production and investment, than increase government revenue.
Independent modelling by the Manufacturers Association of Nigeria shows that an aggressive or poorly structured excise increase could reduce the sector’s gross value added from ₦14.3 trillion to as low as ₦11.5 trillion by 2030.
Such a contraction would threaten more than 300,000 jobs across factories, distribution networks, transport corridors, and the millions of micro-retailers who depend on daily turnover for survival. At a time when Nigeria counts 133 million people as multidimensionally poor and up to 33.2 million at risk of acute food insecurity, any policy that contracts low-margin consumer markets will have immediate and regressive effects on households.
The proposed amendment also ignores Nigeria’s industrial linkages. Nonalcoholic beverage producers are likely among the leading industrial users of refined sugar under Nigeria Sugar Master Plan (NSMP) II, given growth in beverage consumption and the documented rise in food-andbeverage–sector demand.
However, public data do not allow a definitive breakdown of offtake by subsector. A sharp decline in beverage volumes would reduce sugar demand, weaken the Master Plan’s economics, and stall ongoing agricultural investments in communities that depend heavily on the sector. Far from being an isolated revenue measure, the amendment risks collapsing an entire ecosystem.
Supporters of the bill often justify it using the language of public health, pointing to global trends in sugar-sweetened beverage taxation. However, the health case does not hold when examined in context. Nigeria’s per capita sugar consumption, which is roughly 7 to 8.3 kilograms per year, is one of the lowest in Africa and significantly below the global average. The World Health Organization’s recommended limit is roughly equivalent to 9 kilograms per year.
Moreover, non-alcoholic beverages account for only about 5 percent of household sugar intake and a mere 2.4 percent of daily caloric consumption. These figures do not support the argument that beverages are a major driver of noncommunicable diseases in Nigeria.
The WHO itself, in its 2024 update, did not classify sugar-sweetened beverage taxes among its “best buy” interventions for low- and middle-income countries, largely because the evidence remains inconclusive and context-dependent.
What data consistently show is that NCD prevalence in Nigeria is driven more by poverty, genetics, sedentary lifestyles, limited access to healthcare, and dietary patterns dominated by high-carbohydrate staples, not by soft drink consumption. It is therefore misleading to frame an excise levy as a decisive public health tool in a country where sugar intake is already among the lowest globally.
The Senate’s isolated intervention is happening at a time when the Executive is building a unified framework to address exactly these issues.
The Presidential Fiscal Policy and Tax Reform Committee is already designing an evidence-based excise regime that balances revenue needs, industrial competitiveness, public health considerations, and administrative feasibility.
To introduce a standalone amendment while this broad reform process is underway is to undermine the very coherence Nigeria desperately needs. Policy overlap has been one of Nigeria’s most persistent obstacles to sustainable growth; it sends conflicting signals to investors, increases compliance costs, and creates unintended contradictions across sectors.
Nigeria needs discipline in policymaking, not improvisation. It needs reforms anchored in credible modelling, not emotionally appealing but economically ineffective assumptions. Most of all, it needs fiscal measures that strengthen, rather than weaken, the country’s industrial base and job-creation prospects.
The Senate should therefore withdraw the proposed amendment. Doing so is not a retreat; it is an affirmation of responsible governance. Withdrawing the bill would allow the Executive’s integrated tax reform to run its course and ensure that any new excise measures are consistent with macroeconomic realities, sectoral data, and international best practice.
Nigeria has an opportunity to rebuild investor confidence and create a tax system that supports both growth and public health. But that opportunity can only be realised through coherence and not fragmentation.
The path forward is clear: respect the reform process, prioritise evidence over assumptions, and avoid policy experiments that could damage an already fragile economy. Nigeria cannot afford a legislative misstep that undermines the very reforms designed to secure its future.
*Uwadiegwu is a commentator on national issues. He is based in Abuja, Nigeria.
