The Centre for the Promotion of Private Enterprise (CPPE) has strongly rejected calls for the introduction of additional taxation on sugar-sweetened beverages (SSBs), describing the proposal as ill-conceived, poorly timed, and inconsistent with Nigeria’s current economic realities and tax reform priorities.
The proposal, put forward by Corporate Accountability and Public Participation Africa (CAPPA), seeks to impose further fiscal measures on the beverage sector. However, CPPE maintains that such a move runs counter to the Federal Government’s ongoing tax reform agenda, which is focused on reducing the burden on businesses, improving tax efficiency, and stimulating investment across key sectors of the economy.
CPPE noted that Nigeria’s economy remains in a fragile recovery phase, with businesses operating under severe macroeconomic pressures. Inflation remains elevated, significantly eroding consumer purchasing power, while interest rates have climbed to historic highs, with the Monetary Policy Rate exceeding 26.5 percent and lending rates rising above 30 percent for many firms. In addition, energy costs have surged dramatically, with diesel prices increasing by over 70 percent and petrol prices rising by more than 200 percent in the past two years, forcing many manufacturers to rely on expensive self-generation due to unreliable grid electricity. Exchange rate depreciation has further compounded these challenges by driving up the cost of imported inputs and raw materials.
Within this context, CPPE emphasized that the manufacturing sector—particularly the food and beverage segment—is under intense strain. The sugar-sweetened beverage industry, in particular, is highly energy-intensive, relying on power at multiple stages of production including water extraction and treatment, heating and pasteurisation, bottling and packaging, as well as refrigeration and cold-chain logistics. These cumulative cost pressures have significantly weakened the operating environment for manufacturers.
The think tank highlighted that prices of beverages and other consumer goods have risen by over 50 percent in the past two years, while sales volumes have declined due to weakened consumer demand. Many operators, especially small and medium-scale producers, are facing existential threats. Against this backdrop, CPPE warned that imposing additional taxes on the sector would amount to a punitive layering of fiscal pressure, further destabilising already fragile business operations.
CPPE also raised concerns about the broader implications for employment, investment, and value chains. The food and beverage sector is one of the largest employers in Nigeria’s manufacturing space, supporting a vast ecosystem that spans agriculture, processing, logistics, retail, and hospitality. The sugar-sweetened beverage segment plays a particularly strategic role due to its scale and integration across these value chains.
According to CPPE, additional taxation could trigger production cutbacks, force the closure of vulnerable firms, and lead to widespread job losses across production, distribution, and retail channels. It could also disrupt agricultural supply chains linked to beverage production and accelerate the informalisation of the sector as businesses struggle to survive. At a time when unemployment and underemployment remain high, such outcomes would further exacerbate socio-economic challenges.
While acknowledging concerns about rising cases of non-communicable diseases such as diabetes, CPPE argued that taxing sugar-sweetened beverages is not an effective standalone solution to public health challenges. The organisation stressed that health outcomes are influenced by broader lifestyle factors, including overall dietary habits, physical inactivity, and consumption patterns across multiple food categories.
CPPE noted that global evidence on sugar taxes has produced mixed results, with limited long-term impact on health outcomes in many countries, particularly where complementary interventions are lacking. It recommended a more holistic approach focused on public health education, promotion of active lifestyles, improved access to preventive healthcare, and constructive engagement with industry stakeholders.
The organisation further warned that introducing new sector-specific taxes would undermine policy consistency and send negative signals to investors. It pointed out that the current administration has received commendation for its efforts to streamline the tax system, reduce multiplicity of taxes, and create a more investment-friendly environment. Reversing course by imposing additional taxes on a struggling sector, CPPE argued, would create uncertainty and weaken investor confidence in Nigeria’s manufacturing landscape.
In conclusion, CPPE reiterated that the proposed tax on sugar-sweetened beverages is misaligned with Nigeria’s economic priorities and unjustifiable given the extraordinary cost pressures facing the industry. It cautioned that such a policy would undermine business sustainability, threaten jobs, discourage investment, and further strain consumers.
The organisation therefore called on the Federal Government to reject the proposal, urged the National Assembly to discontinue any legislative consideration of the tax, and advised public health authorities to prioritise education, prevention, and lifestyle-based interventions.
“At this critical stage of Nigeria’s economic recovery, the priority should be to support businesses, protect jobs, and strengthen growth—not to impose additional tax burdens on an already strained sector,” CPPE stated.
