According to the World Health Organization (WHO), non-communicable diseases (NCDs) are responsible for 29% of deaths in Nigeria and place a heavy burden on the country’s health systems. Leading experts have warned that NCDs are quietly becoming a major health concern, especially in cities where ultra-processed foods high in salt, unhealthy fats and sugar have become increasingly common.
It is believed that about 11 million Nigerians suffer from diabetes, but millions remain undiagnosed. The country currently ranks among the leading African countries in terms of prevalence. In 2022, the Nigerian government launched a Tax on Sugar-Sweetened Beverages (SSB)To curb the rising cases of diabetes and other diet-related non-communicable diseases (NCDs).
The tax, of 10 naira ($0.65, €0.57 cents) per litre, was expected to discourage excessive sugar consumption while generating revenue for health care. But four years later, public health advocates and economists say the levy has become too weak to influence consumer behavior and change health outcomes. As Nigeria’s inflation increases and the cost of goods rises, questions arise about whether the country’s SSB tax is serving as an effective health policy.
“Nigeria’s 10 (naira) per litre, which is barely 2% of the retail price, is pocket change, not policy,” Ikemesit Effiong, managing partner of SBM Intelligence, told DW. WHO recommends 20%.
Some experts say that increasing the current SSB excise tax from 10 Naira per liter to 130 Naira would increase retail prices by about 39% and potentially reduce annual per capita consumption of sugary drinks by 29%. Nigeria’s Coordinating Minister of Health and Social Welfare, Muhammad Pate, said the government could secure at least 40% of the revenue generated to fund health programmes.
according to a Study Led by the Center for the Study of African Economies on SSB consumption patterns in the country, Nigeria ranks fourth globally in SSB consumption, with annual sales of about 38.6 million liters (10.2 million gallons) and an estimated market value growth of 16.63%.
Impact of inflation on Nigeria’s sugar tax
Since the implementation of the tax, Nigeria has faced economic shocks, especially following the removal of fuel subsidies, which has further exacerbated the country’s cost-of-living crisis.
Food prices have soared, while prices of beverages and household items have also risen sharply. For many Nigerians, the price of soft drinks has more than doubled over the years, largely due to inflation and rising production costs rather than the sugar tax.
“The typical drink size in the country is 50 cl (centilitre) or smaller, which means the tax only adds 5 naira or less per bottle. Because it is not percentage-based, the levy does not adjust for inflation or increases in manufacturers’ prices,” Opeyemi Ibitoye, program officer for the SSB Tax Campaign in Corporate Accountability and Public Partnership Africa (CAPPA), told DW. Therefore, its impact is less over time. It gets done.”
Adewunmi Amoruwa, chief strategist at Gatefield, said the SSB tax currently accounts for only 2% of the cost of a bottle, down from 6.7% five years ago, when the tax was implemented. “That amount was not enough, and it could have been easily absorbed by the beverage industry,” he told DW, stressing that the design was flawed because it did not target the formulation.
“If the tax is fixed and not based on sugar content or sugar amount, there’s really no incentive for the industry to change their formulas or recipes or reduce the sugar content in their drinks.”
Retaliation from industry
The campaign for increase has not gone down well with the beverage industry. during a parliamentary hearing“Late last year, the Manufacturers Association of Nigeria (MAN) opposed the proposed amendment, arguing that the increase could lead to job losses in the manufacturing sector and increase operating costs.
But according to Adewunmi, the beverage industry always turns to this playbook to slow down reforms. “One of the classic things is to weaponize a country’s economic uncertainty. When people are in this economic situation, where inflation is the order of the day and unemployment is widespread, they start to panic,” he said, before adding that the debilitating impact of sugary drink-related illnesses on the economy is more severe than what the industry pays out in tax revenue.
There is great potential for a tax on sweetened beverages. Experts and health advocates in the country often cite the implementation of the tax in countries such as Mexico and South Africa and its direct impact on consumption.
For example, Mexico is one of the world’s leading consumers of sugary beverages; One in three children in the country is overweight, while diabetes, which companies label foods, is the second leading cause of death in the country, accounting for 100,000 deaths per year. The implementation of a 10% tax on all sweetened beverages in 2014 led to a nearly 10% decline in consumption. By 2020, the country passed a law mandating companies to label food and beverages that contain added sugar, calories, and saturated fat.
Effiong proposed that Nigeria’s tax on sugary beverages be indexed to inflation so it does not evaporate, the revenue be linked to the health budget so people can see the benefits, and it be paired with mandatory warning labels. “Nigeria adopted the tax but refused to implement the playbook. The result is a policy that looks good on paper but does nothing on the ground,” he said.
For Ibitoy, tax revenues should be limited to health care and management of non-communicable diseases. This will mean more accessible testing, affordable medicines and better community health services for Nigerians. In a country where families often pay out of pocket for chronic care, earmarking revenue is not just good governance; It is a lifeline that can save lives and reduce the huge financial burden of NCDs.
Edited by: Crispin Mavakideau