The prices of soft drinks and other sugar-sweetened beverages may increase following the Senate's approval of a new excise duty regime. This measure replaces the current flat-rate tax with a percentage-based levy that is tied to retail prices.
The upper chamber endorsed the measure during plenary while considering and adopting the report on the Customs, Excise Tariff, etc. (Amendment) Bill. Lawmakers also endorsed the creation of a dedicated funding stream to support public health interventions across the country.
This initiative is aimed at curbing the growing burden of non-communicable diseases (NCDs), including diabetes, obesity, hypertension, and cardiovascular diseases. Health experts increasingly link these conditions to excessive sugar consumption and unhealthy dietary habits.
The approval followed the adoption of a report presented by the Chairman of the Senate Committee on Finance, Sen. Sani Musa. Under the current tax regime, manufacturers and importers of sugar-sweetened beverages pay an excise duty of N10 per litre on products such as carbonated drinks, energy drinks, and other sweetened beverages. This tax was initially introduced to discourage excessive sugar consumption and generate additional revenue for healthcare spending.
However, Senator Musa informed lawmakers that the existing framework has lost much of its effectiveness. Inflation has significantly reduced the real value of the levy over time. He stated that the fixed-rate tax no longer provides a strong enough incentive to discourage excessive consumption of sugary drinks, and its contribution to government revenue has also weakened amid rising prices.
To address these challenges, the Senate approved a new framework that will replace the flat-rate levy with a percentage-based excise duty linked to retail prices. The Minister of Finance will determine the exact structure of the levy in line with global best practices.
When the levy was first introduced, a bottle of soft drink sold for about N150. Today, similar products typically retail between N350 and N450, reducing the relative impact of the N10-per-litre charge on consumer behaviour.
Nigeria remains one of Africa’s largest consumers of sugar, with annual consumption estimated at about 1.8 million metric tonnes. More than 90% of this demand is met through imported raw sugar, which is subsequently refined locally by major industry players such as Dangote Sugar Refinery and Golden Penny.
Health experts have long warned that excessive sugar consumption, particularly through ultra-processed foods and beverages, contributes to a rise in lifestyle-related illnesses including diabetes, obesity, hypertension, and cardiovascular diseases.
