Stakeholders in the Nigerian manufacturing sector have expressed concern about the move by the Senate Committee on Finance to amend the Customs and Excise Act to increase excise duty on non-alcoholic beverages.
The Centre for the Promotion of Private Enterprise (CPPE) said the move is economically disruptive and inconsistent with Nigeria’s broader development and industrial policy objectives.
In a statement on Monday, December 1, signed by its Director/Chief Executive Officer, Dr Muda Yusuf, CPPE said the proposal comes at a time when manufacturers, small and medium-sized entrepreneurs (SMEs), distributors, and retailers across the country are grappling with unprecedented macroeconomic pressures.
“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.
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“Against this backdrop, the proposal to further increase excise duty on non-alcoholic beverages is economically disruptive, socially harmful, procedurally flawed, and inconsistent with Nigeria’s broader development and industrial policy objectives,” the CPPE stated.
Implications of the proposed increase
According to the CPPE, the proposed excise duty increase carries significant risks that could extend beyond the beverage industry.
It asserted that any additional tax on beverages will translate directly into 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,” it maintained.
“It also poses a threat to the jobs and livelihoods of the masses as the beverage industry sustains thousands of jobs across manufacturing, supply chains, logistics, retail, and the informal sector.
“Any contraction in production or sales will have ripple effects, precipitating job losses at a time when unemployment remains a major national challenge,” the CPPE said.
The centre pointed out that, contrary to the assumption that higher excise rates translate to higher revenue, the opposite is more likely.
“When consumption declines due to price increases, revenue falls. Many countries that imposed sudden excise hikes on similar products later recorded revenue shortfalls due to reduced sales volumes.
“SMEs involved in production, distribution, and retail will be hit the hardest. Many may be forced out of business, deepening poverty and reducing economic participation,” the CPPE added.
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The Centre also expressed worries about what it considers procedural inconsistencies surrounding the proposal, stating that it raises fundamental governance questions.
“There is limited evidence of inter-ministerial consultation, economic impact assessment, or stakeholder engagement.
“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,” the CPPE asserted.
What the stakeholders are proposing
According to the CPPE, after its thorough review and consultation with industry stakeholders, economic experts, and public policy analysts, the stakeholders urged that the proposed increase in excise duty on non-alcoholic beverages be discontinued.
It stressed that the current economic realities render the proposal counterproductive and potentially harmful to national economic recovery and the welfare of the people.
The stakeholders demand that excise policy rate-setting should remain an administrative function, and not be legislated into the Customs and Excise Act.
They urged the government to prioritise broader public health strategies rather than using taxation as the primary tool, stating that nutrition education and awareness campaigns are more effective and less socially disruptive, CPPE said.
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The Centre added that the stakeholders are calling on the Senate committee on finance to reconsider the proposal in light of its potential economic, social, and institutional consequences.
They want the presidency and the Federal Ministry of Finance to reaffirm the role of the executive in setting excise duty rates and ensuring coherence across fiscal policy domains.
The stakeholders also called on the Federal Ministry of Health to work collaboratively with manufacturers, civil society, and nutrition experts on non-tax health interventions.
They also called on industry stakeholders to commit to responsible advertising, voluntary sugar reduction programmes, and consumer awareness campaigns.
“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 added.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
