Manufacturers warn new sugar tax could erase ₦2.8 trillion from Nigeria’s economy
Industry group says proposed excise regime may threaten jobs, investments and sugar value chain growth
The Manufacturers Association of Nigeria (MAN) has warned that a proposed change to the country’s sugar-sweetened beverage tax regime could wipe out as much as ₦2.8 trillion in economic activity within a year of implementation, raising concerns about its impact on jobs, investments and the broader manufacturing sector.
The warning follows provisions contained in the Customs and Excise Tariff (Consolidation) Act (Amendment) Bill 2025, which seeks to replace the current excise duty of ₦10 per litre on sugar-sweetened beverages with a levy based on a percentage of retail prices.
According to MAN Director-General, Segun Ajayi-Kadir, the proposed shift could trigger significant disruptions across Nigeria’s food and beverage value chain, affecting everyone from manufacturers and distributors to sugarcane farmers and small-scale beverage retailers.
He said the consequences would extend beyond factory operations in major industrial centres such as Lagos and Kano, reaching agricultural communities and millions of Nigerians whose livelihoods depend on the sector.
While acknowledging the government’s need to raise revenue and pursue public health objectives, Ajayi-Kadir argued that tax policies must be carefully designed to avoid unintended economic consequences.
He warned that moving from a fixed excise rate to a percentage-based levy could increase operating costs for manufacturers at a time when businesses are already grappling with inflation, foreign exchange volatility and rising production expenses.
According to him, the proposed policy could weaken investor confidence, slow industrial growth and undermine ongoing efforts to strengthen local production.
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The association estimates that the immediate economic impact could be severe. It is projected that the agricultural value chain, particularly sugarcane farmers participating in the Nigeria Sugar Master Plan’s backward integration programme, could suffer reduced demand as beverage manufacturers cut production and purchasing volumes.
MAN estimates that the sector could lose between ₦600 billion and ₦1.2 trillion in gross value added within the first six months of implementation, compared to a 2023 industry baseline of ₦14.3 trillion.
The association further warned that the overall value chain impact could reach between ₦2.5 trillion and ₦2.8 trillion within six to 12 months after the policy takes effect.
Employment is also expected to come under pressure. Citing projections by PricewaterhouseCoopers (PwC), Ajayi-Kadir said a 10 to 20 percent increase in excise duties could reduce employment across the sector from about 1.5 million workers to 1.2 million or fewer by 2030.
The affected jobs, he noted, include factory workers, truck drivers, market traders, kiosk operators and smallholder farmers who rely on the food and beverage industry for income.
The non-alcoholic drinks sector remains one of the largest contributors to Nigeria’s manufacturing industry, accounting for roughly one-third of total manufacturing output and supporting more than 1.5 million direct and indirect jobs.
As debate continues around the proposed legislation, manufacturers are calling on the Federal Government to adopt what they describe as a balanced and evidence-based approach to taxation, arguing that revenue generation and public health goals should be pursued without jeopardising economic growth and employment.
