Nigerians may soon pay more for soft drinks and other sugar-sweetened beverages following the Senate’s approval of a new excise duty framework that replaces the current flat-rate tax with a percentage-based levy tied to retail prices.
The upper chamber approved the measure on Wednesday while considering the report of the Joint Committee on Finance and Customs, Excise and Tariff on the Customs, Excise Tariff (Amendment) Bill. Lawmakers also endorsed the creation of a dedicated funding mechanism to support public health interventions nationwide.
The proposed reform is aimed at addressing the rising burden of non-communicable diseases (NCDs) such as diabetes, obesity, hypertension, and cardiovascular conditions, which health experts increasingly associate with excessive sugar consumption.
Presenting the committee’s report, Chairman of the Senate Committee on Finance, Senator Sani Musa, said the existing excise duty of N10 per litre on sugar-sweetened beverages has become less effective due to inflation and rising product prices.
Introduced to discourage excessive sugar intake while generating revenue for healthcare, the fixed-rate levy has gradually lost its impact as beverage prices have surged.
“When the tax was introduced, a bottle of soft drink sold for about N150. Today, similar products retail between N350 and N450, significantly reducing the influence of the N10-per-litre charge on consumer behaviour,” Musa explained.
To address the gap, the Senate approved a transition to a percentage-based excise duty linked to retail prices. The final structure and rate of the levy will be determined by the Minister of Finance in line with international best practices.
Nigeria remains one of Africa’s largest consumers of sugar, with annual consumption estimated at about 1.8 million metric tonnes. More than 90 per cent of the country’s sugar demand is met through imported raw sugar refined locally by major industry players.
Health experts have repeatedly warned that increasing consumption of sugary drinks and ultra-processed foods is fuelling a rise in lifestyle-related illnesses.
Current estimates indicate that about 18 million Nigerians are living with diabetes, while hypertension affects roughly 40 per cent of the adult population. The growing prevalence of these conditions continues to place pressure on households and the healthcare system.
Lawmakers noted that Nigeria’s health sector remains heavily dependent on out-of-pocket spending, leaving many families financially vulnerable when faced with chronic illnesses.
The Senate’s decision comes despite concerns from some business groups, including the Centre for the Promotion of Private Enterprise (CPPE), which has cautioned against imposing additional taxes on consumers and manufacturers amid prevailing economic challenges.
Nigeria is estimated to consume about 38.6 million litres of soft drinks daily, making it one of the world’s largest soft drink markets. At the current rate of N10 per litre, the Federal Government generates approximately N386 million daily from the excise duty.
Several public health studies have recommended raising the tax to at least 20 per cent of retail prices, or as much as N130 per litre, to achieve a stronger public health impact and discourage excessive consumption.
The economic burden of non-communicable diseases is also substantial. According to the latest National Health Accounts data, households with NCD patients spend an average of N608,940 annually on treatment and care. Collectively, Nigerians spend an estimated N1.92 trillion each year managing these illnesses.
