Nigeria Senate Approves New Sugar Tax That Will Push Up Price of Soft Drinks

The Senate has approved a new tax structure on sugar-sweetened beverages in Nigeria, replacing the flat N10 per litre charge with a percentage-based levy linked to retail prices. 

The decision is expected to push up the price of soft drinks and similar products.

Lawmakers took the decision during plenary while considering the report on the Customs, Excise Tariff, etc. (Amendment) Bill.

The new system hands the Minister of Finance responsibility for setting the exact rate, in line with fiscal guidelines.

Under the old arrangement, manufacturers and importers paid N10 per litre on carbonated drinks, energy drinks, and other sweetened beverages.

Authorities introduced the tax in 2022 to discourage high sugar intake and raise funds for health programmes.

Over time, inflation weakened that structure. A bottle of soft drink that sold for about N150 when the tax began now sells between N350 and N500. The fixed levy lost much of its effect on both price control and consumption patterns.

The Senate argues that the new percentage-based model will restore relevance to the tax. It also aims to improve revenue generation while linking collections more closely to current market prices.

Between 2022 and 2025, the N10-per-litre charge generated about N108.6 billion for the government. Lawmakers say the figure no longer matches the scale of public health needs.

A portion of the new revenue will support a dedicated health fund. The fund will support primary healthcare, disease prevention, and health insurance coverage for vulnerable groups across the country.

Public health formed a large part of the issue. Diabetes affects about 8% of Nigerians, or roughly 18 million people. Hypertension is more widespread, affecting an estimated 40% of adults.

Costs of treatment keep increasing and on average, households spend about N608,940 annually per patient managing non-communicable diseases. National spending on these conditions stands at about N1.92 trillion each year.

Most healthcare expenses still fall directly on families. Many households pay out of pocket when a serious illness occurs, which increases financial pressure.

Nigeria also ranks high in global soft drink consumption. Citizens consume about 38.6 million litres daily, placing the country as the fourth-largest consumer worldwide.

Sugar demand stands at about 1.8 million metric tonnes each year. More than 90% of this demand comes from imports. Local refining is dominated by known operators such as Dangote Sugar Refinery and Golden Penny.

Health experts have long linked high sugar intake to rising cases of obesity, diabetes, hypertension, and cardiovascular disease. They argue that sugary drinks contribute significantly to these trends.

Stakeholders in the industry are divided on the policy. The Centre for the Promotion of Private Enterprise has warned against higher taxes on sweetened beverages. It argues that consumers already face strong economic pressure.

Health specialists, however, are aiming for stronger taxation. Some studies recommend rates of up to 20% of retail price, or as high as N130 per litre, to reduce consumption meaningfully.

Global health bodies, including the World Health Organisation, have also supported sugar taxes as a tool to curb lifestyle-related diseases.

On the implications for consumers, prices of popular soft drinks, energy drinks, and similar products are likely to increase once the new rate takes effect. Demand may also shift if prices surge.

Manufacturers may feel pressure as well, with higher costs affecting sales volumes, but it may also push companies to expand low-sugar product lines.

For the health sector, the policy could provide additional funding over time. This may ease dependence on out-of-pocket spending, though outcomes will depend on implementation.

Equity concerns are part of the discussion. Lower-income households in Nigeria may feel the sugar tax impact of higher prices more steeply, especially in a market where sugary drinks are widely consumed.

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