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By Merit Ibe
The Centre for the Promotion of Private Enterprise (CPPE) has strongly rejected calls for additional taxation on sugar-sweetened beverages (SSBs), warning that the move could undermine Nigeria’s fragile economic recovery, weaken businesses, and trigger job losses across key sectors. In a policy brief issued on Tuesday, the private sector advocacy group described the proposal, championed by Corporate Accountability and Public Participation Africa (CAPPA), as “ill-conceived” and poorly timed, arguing that it runs counter to the Federal Government’s ongoing tax reform agenda.
According to CPPE, the current policy direction of the administration is focused on reducing the tax burden on businesses, improving efficiency, and stimulating investment, making any move to introduce new sector-specific taxes contradictory.
“At a time when the Nigerian economy is still navigating a fragile recovery, the imposition of new taxes on the manufacturing sector would be profoundly counterproductive and disruptive to growth, employment, and investment,” the group stated.
The organisation painted a grim picture of the operating environment, noting that businesses are grappling with intense macroeconomic pressures. Inflation remains high, eroding consumer purchasing power, while interest rates have surged, with lending rates climbing above 30 per cent for many firms. Energy costs have also spiked sharply, with diesel prices rising by over 70 per cent and petrol costs increasing by more than 200 per cent in the past two years. This, CPPE said, has made self-generation of power increasingly expensive amid unreliable electricity supply. Compounding the challenge is exchange rate depreciation, which has driven up the cost of imported raw materials and production inputs, placing additional strain on manufacturers.
The group noted that the sugar-sweetened beverage industry, a major segment within the manufacturing sector, is particularly vulnerable due to its heavy reliance on energy across production and distribution processes.
“The SSB industry relies heavily on energy at multiple stages of production, including water extraction, heating, carbonation, bottling, and cold-chain logistics,” CPPE said, stressing that rising energy and distribution costs have significantly worsened operating conditions.
It added that the impact is already visible, with prices of beverages and other consumer goods rising by over 50 per cent in the last two years, while sales volumes have declined due to weak consumer demand.
“Many operators, especially small and medium-scale beverage producers, are under existential pressure,” the group warned, noting that additional taxes would further erode already thin margins.
Beyond immediate business concerns, CPPE highlighted broader risks to jobs and the economy. The food and beverage sector, it said, is one of the largest employers in Nigeria’s manufacturing space, supporting a vast value chain that spans agriculture, processing, logistics, retail, and hospitality.
Imposing additional taxes on the SSB segment, the group cautioned, could lead to production cuts, factory closures, job losses, and disruptions to supply chains linked to agriculture and packaging.
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“Additional taxation at this time would have amplified negative consequences, including accelerated downscaling of production, closure of vulnerable firms, and increased informalisation of the sector,” CPPE stated.
On public health concerns often cited in support of sugar taxes, the organisation argued that taxation alone is not an effective solution to rising cases of non-communicable diseases such as diabetes.
While acknowledging the health risks, CPPE maintained that broader lifestyle factors, including diet, physical activity, and consumption habits, play a more significant role.
“Singling out a highly energy-stressed industrial segment for punitive taxation is neither equitable nor effective,” it said, adding that global evidence on sugar taxes shows mixed outcomes, with limited long-term impact in many countries.
Instead, the group called for alternative approaches, including public health education, promotion of healthier lifestyles, improved access to preventive healthcare, and stronger collaboration with industry stakeholders.
CPPE also warned that introducing new taxes in the current climate could send negative signals to investors and undermine confidence in Nigeria’s manufacturing sector.
“Policy credibility and consistency are critical for sustaining investment inflows and economic recovery,” it noted, stressing that abrupt fiscal measures could create uncertainty and deter both local and foreign investors.
In its conclusion, the organisation urged the Federal Government to reject the proposed tax, while calling on the National Assembly to halt any legislative consideration of the measure.
At a time of economic strain, CPPE insisted that the priority should be to support businesses, protect jobs, and drive growth, not impose additional burdens on already struggling sectors.
“The policy imperative should be to strengthen growth, not weaken already fragile business fundamentals,” the group said.
