On December 31, 2021, the president signed into law a policy that would become a major weapon in our fight against obesity and overweight. The policy was part of the new finance bill, and it fixed a N10 sugar tax per litre on all carbonated and sugar-sweetened beverage (SSB) drinks.
According to the Minister for Finance and National Planning, Mrs Zainab Ahmed, the tax is meant to discourage excessive sugar intake; but it is also an avenue to generate the much needed revenue to strengthen health care delivery in the country. It is estimated that the sugar tax will generate as much as N81 billion in three years.
The federal government is following after 50 other countries that have implemented a similar sugar tax, including South Africa in 2016 and UK in 2018. These countries have seen more than expected reductions in sugar intake since their policies became active.
In Nigeria, the sugar tax is a welcomed development and a major step in the fight against the evil Siamese twins of obesity and overweight; and this is why the National Action on Sugar, a health coalition for advocating for policy measures to combat non-communicable disease, views the policy as a preventive measure. Also, the Nigerian Cancer Society, while commending the federal government, noted that non-communicable diseases account for one in three deaths in the country.
SSB has been linked with obesity, Type 2 diabetes, overweight, tooth decay and cardiovascular diseases, according to a 2010 World Bank report. Obesity and overweight are further associated with other health complications, such as heart disease and certain types of cancer and stroke. Globally, obesity and overweight are now ranked as the third leading cause of death for adults. A 2016 report by Statista, a global data firm, indicates that around 1.9 billion people are overweight globally; and out of this number, 650 suffer obesity. The figure for Nigeria as of 2020 was 12 million.
Research has shown a strong correlation between SSB and obesity-overweight. The evidence is overwhelming, and it should scare us. For instance, according to Statista, Nigeria is the fourth largest consumer of soft drinks after the US, China and Mexico.
Apparently, we are number one in Africa, consuming more than 40 million liters of soft drinks per annum. In fact, the estimated year-on-year volume growth for 2022 is 0.5 percent – meaning that Nigerians will consume a whopping 73,567,500 liters of soft drinks this year.
So far, there have been major attacks on the policy from the Manufacturers Association of Nigerian (MAN) and the Nigerian Labour Congress (NLC). Their arguments have been targeted at the two main aims of the policy; namely discouraging excessive sugar intake and revenue generation to support the 2022 budget.
They asserted that there were other avenues of major sugar intake aside from soft drinks, especially our heavy carbohydrate diet. On the revenue side, they picked holes in the federal government’s revenue projections.
According to MAN’s estimate, the federal government will lose up to N197 billion in VAT, tertiary tax, and company income tax. MAN further contends that the implementation of the policy will trigger the loss of N1.9 trillion in the sector over the next five years; and that the consumer will be on the receiving end, bearing the full brunt of the policy.
In the same vein, the NLC is concerned that as many as 15,000 jobs could be on the line as a result of the policy. They argue that the impact of the policy could be far-reaching, considering the current unemployment rate of 33 per cent; and the fact that 38 per cent of the total workforce of MAN is domiciled in the soft drinks sub-sector.
The primary intent of the policy is laudable, but the idea of generating revenue is completely flawed, consequently making the policy deficient, and neither MAN nor NLC addressed this deficiency in their opposition to the policy. For instance, the UK government estimated about £500 million from their own sugar tax; but in 2020, the tax generated only £33 million due to the compliance component of the policy.
The UK sugar tax termed soft drinks industry levy (SDIL) took off in 2018, and since then a myriad of reports have shown its effectiveness in the reduction of sugar intake, both for households and residents. One report indicated that the SDIL is responsible for the reduction of sugar intake of nearly 6500 calories per resident, and a reduction of about 30g per household per week. The SDIL has a layered structure, whereby, soft drinks having eight grams of sugar per 100 ml is taxed £0.24 per litre.
Contrary to the position of MAN an NLC, available research has not shown any overall decline in the sales of soft drinks in the UK, indicating that the policy is actually achieving the intended result without any negative consequence on the soft drinks industry. A similar result was seen in South Africa after the implementation of their own sugar tax in 2016. A report from The Lancet indicates that the policy prompted an industry-wide sugar content reduction.
However, the Nigerian sugar tax, in spite of being a major step in the right direction, is deficient. Unlike the UK sugar tax, the Nigerian sugar tax is structured in a manner that perpetually puts the burden on the consumers. It does not incentivise innovation among the soft drinks manufacturers that is capable of leading to sugar content reduction in their products.
For instance, sugar reduction was seen in the UK and South Africa before the implementation of the policy. Before 2018, most of the soft drinks manufacturers in the UK have reduced their gram per 100 ml. Most of the manufacturers producing above five grams per 100 ml brought their sugar content to 4.5 grams per 100 ml; while those producing at above eight grams per 100 ml brought their content to about 7.5 gram per 100 ml.
The Nigerian policy of N10 per litre is a disincentive for change. In the long run, it might not be effective as compared to the SDIL of the UK which has spurred an industry-wide sugar revolution of immense benefits both to the consumer and the soft drink manufacturers. The federal government should take another look at the policy in a bid to better it by addressing the inherent deficiencies in order for the policy to achieve its primary aim.
In the first instance, the federal government should stipulate an acceptable sugar-content level per litre instead of the N10 per litre which is arbitrary, and disregards sugar content level. Secondly, the federal government should jettison the idea of using the policy to generate revenue; rather, it should amplify the health benefits of reducing excessive sugar intake. If this is done, MAN, NLC and other members of the organised private sector will fully be onboard

By: Raphael Pepple