The recently advanced amendment to the sugar-sweetened beverage (SSB) excise regime has triggered rising concern across Nigeria’s manufacturing, public-health, and policy communities.
The proposed legislation, sponsored by Ipalibo Harry Banigo (PDP, Rivers West), seeks to overhaul the existing beverage tax — replacing the long-standing fixed levy of ₦10 per litre with a percentage-based retail excise duty, and earmarking proceeds for health-related programmes.
But that move has inflamed controversy because it singles out the non-alcoholic beverage sector, while other major sugar-dependent industries such as confectioneries, bakeries, dairy and processed foods remain untouched.
The perception, and growing critique, is that this is not a comprehensive sugar tax policy, but rather a targeted levy on beverages alone. Many stakeholders argue that it undermines fairness, distorts competition, and threatens value-chain stability.
On 11 November 2025, the Senate passed the second reading of the bill, officially titled “A Bill to Amend the Customs, Excise Tariffs, Etc. (Consolidation) Act, 2025” (SB. 713). In his lead debate, Senator Banigo clarified that the legislation does not introduce a new tax per se, but seeks to restructure how beverage excise revenue is collected and directed, effectively earmarking part of it for preventive health programmes, disease-prevention, and infrastructure funding.
During the legislative session, Deputy Senate President Barau Jibrin referred the bill to a joint committee comprising the Committees on Finance; Customs, Excise & Tariffs; and Health (Secondary & Tertiary) for detailed scrutiny and stakeholder input. A public hearing was held on November 27, 2025, where civil-society organisations, health-sector advocates, and industry representatives gave divergent views on the bill’s possible impact.
Proponents, including the Minister of Health and social-welfare stakeholders, argue that the amendment is timely, given the rising burden of non-communicable diseases (NCDs) linked to unhealthy diets and sugar consumption. They view the tax as a tool for aligning fiscal policy with public-health goals.
But critics, notably from the private sector and manufacturing groups, warn that the sector-wide focus is misplaced and economically dangerous. The opposition argues that the bill lacks broad-based fairness, threatens jobs, raises production costs, risks backward integration goals under national sugar-sector plans, and may even reduce overall revenue if demand collapses.
As of early December 2025, the bill remains before the joint Senate committees for further debate, analysis, and possibly revisions. Meanwhile, the broader national tax-reform process under the Federal Government continues, making the amendment a flashpoint between legislative initiative and executive-led reform coordination.
The economic significance of Nigeria’s non-alcoholic beverage (NAB) industry cannot be overstated. The sector drives manufacturing, distribution, logistics, and retail, and supports thousands of micro-enterprises across urban and rural communities. It has been a key pillar of backward integration under the national sugar-sector strategy, linking beverage producers to local sugar refineries, cane-farming communities, and agro-value-chains built under the Nigeria Sugar Master Plan (NSMP II).
By imposing a disproportionately heavy and retail-price–based levy on beverages alone, the Senate risks unraveling these linkages. A sharp increase in excise duty could depress demand, reduce factory utilisation, trigger layoffs, shrink sugar offtake from local refineries, and undermine investments along the entire value chain, from farm to manufacturing to retail.
Global experience and local economic modelling suggest that beyond a certain threshold, aggressive taxation on soft drinks tends not to increase government revenue, but rather erodes the taxable base by shrinking output, encouraging informal trade, and incentivising smuggling or unofficial substitutes. Critics warn that an ad-valorem tax pegged to retail price introduces price volatility, compliance challenges, and administrative burdens, especially under Nigeria’s current economic constraints of inflation, currency instability, and depressed consumer purchasing power.
Moreover, focusing the tax only on beverages raises serious equity and fairness concerns. Other sugar-intensive industries remain unaffected even though they contribute similarly to sugar demand and industrial activity. The policy therefore risks distorting market competition and undermining value-chain integration goals.
What is unfolding is more than a tax debate; it is a structural clash in policy-making approach. The Federal Government, through the Presidential Fiscal Policy and Tax Reform Committee (FPTR), is pursuing a comprehensive, economy-wide reform agenda. Its guiding principles emphasize predictability, transparency, harmonisation, and minimal disruption to key industries.
The Senate’s sugar-tax amendment, however, appears to sidestep that broader framework, introducing a focused sectoral tax that may contradict the principles of simplicity, fairness, and industrial protection. Instead of reinforcing national reform, it risks fragmenting fiscal policy, creating uncertainty for investors, and undermining the government’s efforts at restoring business confidence.
This disconnect raises critical questions about coordination, sequencing, and governance: Can Nigeria afford overlapping tax regimes? Can the private sector invest confidently when the legislative and executive branches seem to be working from different policy playbooks?
Given the high stakes — jobs, industrial investment, public health, and fiscal stability — a cautious, evidence-based approach is needed. At the very least, the Senate should pause the amendment and allow the FPTR to complete its structural reform blueprint. This pause would not be a retreat from revenue mobilisation, but rather a commitment to coordinated, data-driven, and economically rational policy.
Meanwhile, comprehensive impact assessments, covering consumption patterns, health outcomes, value-chain consequences, revenue projections, and distributional effects — must be conducted before any sweeping tax change is finalised. The outcome of these studies should inform not only whether a sugar-tax amendment is warranted, but also how it should be structured, implemented, and administered.
Any excise policy must avoid selective targeting. If sugar-sweetened beverages are to be taxed for public health or revenue reasons, the levy should be part of a broad, well-designed sugar policy that applies equitably across all sugar-dependent sectors. It should also be anchored at the production or importation point, not at the retail counter, to ensure administrative feasibility and reduce evasion risk.
Finally, a formal coordination mechanism must be established between the legislature and the executive, ensuring that future fiscal changes are aligned, predictable, and supportive of long-term industrial growth.
The sugar-tax debate unfolding in Nigeria is more than a technical argument about excise rates. It is a test of the country’s ability to manage fiscal reform thoughtfully, protect industrial value-chains, and balance public health with economic growth.
The Senate’s proposal, driven by Senator Ipalibo Harry Banigo, has sparked concern not only because of its potential economic impact, but because it exposes a deeper governance fault line: a disconnect between legislative initiatives and executive-led reform strategy.
If Nigeria is serious about sustainable growth, stable revenue mobilisation, and industrial resilience, it cannot afford disjointed tax experiments that threaten long-term value chains, employment, and investor confidence. What is needed instead is a disciplined, coordinated, and evidence-based approach; one that sees sugar taxation not as a quick fix, but as a carefully integrated component of national economic policy.
The sugar-tax amendment debate should be a turning point toward smarter policymaking. It must not become yet another casualty of institutional friction.
