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Nigeria is considering a major change to the taxation of sugar-sweetened beverages (SSBs) through an amendment to the Customs, Excise Tariff, Etc. (Consolidation) Act (CETA). The proposed amendment would replace the existing ₦10 per litre specific excise duty with an ad valorem tax linked to the value or retail price of beverages.
The Senate passed the bill at Third Reading on 4 June 2026, after which it was transmitted to the House of Representatives for concurrence. As of the time of this report, the amendment has not been enacted into law.
The proposed change is intended to address two broad policy objectives: reducing excessive sugar consumption and generating additional revenue for healthcare and public-health programmes. The Senate has also supported directing part of the revenue towards health promotion, disease prevention, primary healthcare and health insurance for vulnerable Nigerians.
However, the reform comes at a time when households and businesses are already facing high living costs, inflation, foreign-exchange pressures and weaker purchasing power. The central policy question is therefore not simply whether SSBs should be taxed, but whether the proposed tax structure and scale are appropriate for achieving Nigeria’s health and fiscal objectives while managing wider economic effects.
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Public Health and Socioeconomic Reality
The public-health argument for SSB taxation is based on the relationship between high consumption of sugary beverages and diet-related non-communicable diseases. Higher prices can reduce demand for taxed products, while a well-designed tax can encourage manufacturers to reduce sugar content through product reformulation.
The health case, however, needs to be considered alongside Nigeria’s broader consumption and socioeconomic conditions. National Sugar Development Council data show that apparent per-capita sugar consumption fell from 8.4kg in 2022 to 7.1kg in 2023, equivalent to roughly 19.5g per person per day. However, this is an estimate of overall sugar availability/consumption and is not the same measure as WHO’s recommended limit for free sugars. It therefore cannot, by itself, establish that Nigerians are consuming less free sugar than the WHO guideline.
Household welfare is another consideration. The 2022 National Multidimensional Poverty Index found that 62.9% of Nigerians, or approximately 133 million people, were multidimensionally poor. This does not mean that SSB taxation should not be used, but it highlights the importance of assessing how higher prices affect different income groups, particularly when households are already facing pressure on their purchasing power.
Industry and Economic Impact
The beverage industry is part of a wider value chain involving manufacturing, sugar production and imports, packaging, transportation, distribution and retail. The beverage sector supports approximately 1.5 million direct and indirect jobs. A significant tax increase could therefore affect businesses beyond beverage manufacturers themselves.
The potential impact is particularly relevant because the domestic sugar and beverage value chain is already operating under difficult conditions. National Sugar Development Council data show that total sugar consumption declined from approximately 1.72 million tonnes in 2022 to 1.44 million tonnes in 2023, a decline of about 16%. Domestic sugar production also fell from 46,479 tonnes to 30,053 tonnes, representing a decline of approximately 35%.
These changes cannot be attributed solely to the existing SSB excise. Inflation, exchange-rate pressures, input costs and changes in consumer purchasing power also affect sugar demand and production. Nigeria also remains heavily dependent on imported sugar, increasing the sector’s exposure to foreign-exchange conditions.
The key issue for policymakers is therefore to determine the size of the health and revenue gains relative to the potential effects on production, employment, investment and household spending.
Administrative Feasibility and Policy Coherence
The proposed change also has implications for tax administration. A specific tax of ₦10 per litre is relatively straightforward because the liability can be calculated using the volume of beverages produced or imported.
An ad valorem tax is more complex because the tax depends on the value of the product. Effective implementation requires reliable valuation, pricing information, monitoring and enforcement across different products, manufacturers and distribution channels. Changes in retail prices could also change the tax liability, making compliance and revenue forecasting more demanding.
The policy therefore needs to consider not only the potential revenue generated but also the administrative cost of collecting it.
There is also a broader question of policy coherence. Nigeria’s tax reforms have generally sought to simplify tax administration, improve compliance and create a more predictable business environment. Introducing a more complex valuation-based excise system should therefore be assessed against these wider objectives rather than considered in isolation.
Lessons from International Experience
International experience shows that the structure of an SSB tax can influence the behaviour it produces.
Rwanda provides an example of an ad valorem approach, where the tax is based on the value of beverages rather than their sugar content. Such a structure can generate revenue and increase prices, but it does not directly differentiate between products according to how much sugar they contain.
South Africa provides a different model. Its Health Promotion Levy is linked to the sugar content of beverages, creating a financial incentive for manufacturers to reduce sugar levels. Research on the policy found a substantial reduction in sugar consumption from taxable beverages within two years, although consumption of some non-taxable SSBs also increased, demonstrating the importance of substitution effects.
Research on South Africa has also found evidence that both consumer responses and manufacturer reformulation contributed to reductions in the sugar content of beverage purchases.
The United Kingdom has similarly used sugar-content thresholds to encourage manufacturers to reformulate products. These experiences suggest that where the objective is specifically to reduce sugar consumption, linking taxation to sugar content may provide a clearer incentive than taxing products simply according to their value.
Way Forward
Before implementing a substantially higher SSB tax, government should first review the performance of the existing ₦10 per litre levy. This review should provide clear information on revenue collected, how the revenue has been used, changes in SSB consumption and any measurable health outcomes.
Second, the government should assess alternative tax designs. If revenue generation is the primary objective, an ad valorem system may be appropriate. If the objective is to reduce sugar consumption and encourage reformulation, a tiered specific tax based on sugar content could provide a more direct incentive.
Third, an independent impact assessment should examine the likely effects on consumer prices, household welfare, consumption, government revenue, industry output, employment and investment under different tax scenarios.
Finally, any reform should include a monitoring and transparency framework. Revenue collected, changes in sugar content, product reformulation, consumption patterns and health indicators should be tracked over time.
Nigeria’s SSB tax debate therefore presents an opportunity to connect fiscal policy with public-health objectives. The effectiveness of the reform will depend not only on how much tax is imposed, but on whether the tax base, administrative system and use of revenue are aligned with the outcomes government wants to achieve. A transparent review of the existing levy and careful consideration of alternative designs would provide a stronger basis for deciding how Nigeria should proceed.
