Nigeria’s CETA Bill is a Misplaced Legislative Priority

Africa Brief with Ogho Okiti

Nigeria is trying to rebuild growth, improve the business environment, attract investment and implement the major tax reforms passed into law last year. Yet lawmakers are considering a substantial change to the taxation of one segment of the consumer goods market without adequately resolving the broader questions of economic impact, policy coherence and public-health effectiveness.

That is a misplaced priority.

The proposed amendment to the Customs, Excise Tariff (Consolidation) Act (CETA) would replace the existing ₦10 per litre excise on Sugar-Sweetened Beverages (SSBs) with an ad valorem tax. Under this arrangement, the tax payable would be calculated as a percentage of the taxable value of each product, rather than as a fixed amount per litre. The actual burden would therefore depend on the applicable rate and the value used for the assessment.

According to proponents of the bill, the existing ₦10 per litre levy has not been sufficient to reduce demand for SSBs and is therefore ineffective in addressing obesity, diabetes and hypertension. The proposed change is intended to impose a higher, price-linked duty, with the expectation that increased prices will influence consumer behaviour, reduce demand and generate additional government revenue for tackling these health challenges.

There is no argument against the imperative of addressing the rise in obesity, diabetes and hypertension. There is also little doubt that higher prices can influence consumer behaviour. What remains uncertain, however, is whether the proposed tax will translate into measurable reductions in these diseases, as argued by the bill’s proponents. In that context, the bill risks becoming an exercise in fiscal tokenism rather than an effective public-health intervention.

While legislation in many countries is influenced by advocacy, lawmakers are expected to balance advocacy pressures with economic and business considerations. In this case, foreign-funded advocacy groups have been prominent in pushing for the legislation, even though the evidence of success from comparable interventions remains a subject that deserves closer examination. Legislators in both chambers should recognise that advocacy positions, however well-intentioned, do not automatically represent the broader public interest.

Perhaps unconsciously, lawmakers are being drawn into an industrial policy decision with the potential to affect the entire SSB value chain: farmers, manufacturers, packaging companies, transport and distribution businesses, retailers and employment. That is a considerable risk to take for a policy whose public-health outcomes have not been convincingly established.

There is also the question of what has happened to the revenue already collected. According to available figures, the existing ₦10 per litre tax has generated approximately ₦104 billion since its introduction in 2022. Yet there is no clear public record of the specific initiatives or measurable health outcomes financed by this revenue. If the existing tax has already generated substantial funds, it is reasonable to ask what has been achieved with the money before legislating for a higher tax burden. More revenue, without transparency and evidence of impact, does not necessarily translate into better health outcomes.

The proposed change also raises questions about tax administration and its wider economic consequences. Under the current system, manufacturers pay a fixed ₦10 for every litre of a qualifying beverage, regardless of whether that litre sells for ₦300, ₦500 or ₦700. An ad valorem system would make the amount payable dependent on the taxable value and the applicable percentage rate. This introduces questions about valuation, the relevant price to be used and the administration of the tax, particularly in an inflationary environment where prices are constantly changing.

This is inconsistent with the direction of recent tax reforms, which seek to improve compliance through simpler taxation and administration and create a more coherent fiscal framework. A substantially higher, price-linked excise could impose additional compliance costs on businesses, affect production and investment decisions, and have consequences across the value chain, from farming and manufacturing to packaging, distribution and retail. These potential effects deserve proper assessment before the policy is introduced.

Ultimately, the CETA bill risks pursuing a narrow revenue objective at the expense of wider economic priorities. This is particularly concerning when the estimated ₦104 billion already generated through the existing levy has not been accompanied by a clear public account of how much has gone towards addressing obesity, diabetes and hypertension.

Nigeria cannot afford to treat every revenue opportunity as a legislative priority without asking what it will cost the wider economy. The challenge before the National Assembly is not simply to determine whether another tax can be imposed, but whether it is the right tax, designed in the right way and introduced at the right time.

The CETA bill deserves more than a debate about how much additional revenue it might generate. It requires a serious assessment of its implications for public health, manufacturing, employment, household welfare and investment. Until that case is convincingly established, proceeding with the bill would risk confusing the act of raising taxes with the harder task of making fiscal policy work.

The House of Representatives should pause the bill, demand the evidence and insist on a policy design that advances Nigeria’s broader economic interests. That is not resistance to reform. It is what responsible reform requires.