The Director, Public Health Department, Federal Ministry of Health and Social Welfare, Dr Chukuma Anyaike, said this in Abuja at the public presentation of the Simulation Study of the Potential Fiscal and Public Health Effects of SSB tax in Nigeria.
Dr. Anyaike defines sugar-sweetened beverages as drinks that contain natural or added sweeteners, which include various forms of sugars such as brown sugar, corn sweetener, corn syrup, dextrose, fructose, glucose, high fructose corn syrup, honey, lactose, malt syrup, maltose, molasses, raw sugar, and sucrose.
According to him, these drinks also include soft drinks, juices, sweetened coffee, nectars, energy drinks and flavoured dairy products.
He said Frequent consumption of SSB is associated with increased incidence of dental cavities, tooth decay and obesity.
Presently, as contained in the Finance Act 2021, SSB tax is N10 per litre. But there is yet another proposal on the table that Nigeria imposes a tax of N130 per litre of sugar-sweetened beverages (SSB) to curb excessive consumption of the products.
Executive Director, Corporate Accountability and Public Participation Africa (CAPPA), Akinbode Oluwafemi, whose Organisation is asking f the increase is also asking that the new tax should be inserted in the 2024 Finance Act.
Paradoxically, Nigeria has a national sugar masterplan to upscale local production of sugar by up to 70 percent within 10 years.
The country is said to consume about 1.7 million metric tons of sugar annually with the majority used by manufacturers. The bulk of this is imported.
The administration of former President Goodluck Jonathan, worried about the alarming volume of sugar imports into the country and the damaging effect it was having on the Nigerian economy, drafted the Nigerian sugar masterplan, following a blueprint designed four years earlier.
As a precursor to what eventually became the Nigerian Sugar Masterplan (NSMP), the Federal Government said it considered sugar as the third most important commodity after rice and wheat in its strategic food policy. This also followed the rationale that Nigeria has the reservoir of land, water and human resources to produce sugar in sufficient quantities to meet national demand and for export to earn foreign exchange.
The first phase of the masterplan has expired with very little achievements leading to a renewal of the plan for another 10 years.
The volume of imports have continued to rise despite the huge investment the government has made to promote local production.
In fact, the government, on its part, has committed funds to the tune of N170 billion to sugar production in the country under the framework of the national sugar masterplan. It had also doubled down on its backward integration policy to discourage indiscriminate importation of sugar.
Stakeholders are however worried that these efforts by the government could amount to nothing in the light of the growing campaign for higher taxes on sugar sweetened beverages (SSBs) which is one of the major consumers of sugar.
The stakeholders contend that with soaring inflation rates, unemployment, public debt, and poverty rates, further straining the economy with additional taxes may exacerbate existing hardships.
According to them, a closer look at the value chain reveals the broad-reaching impact that the proposed SSB tax will have, noting that it will severely impact not just manufacturing organisations but the distribution channel including petty retailers, and low-income consumers.
“There are documented negative economic effects of such selective taxation, which in Nigeria’s case, runs against the government’s current policy on increasing sugar production in the country – a task that is expected to boost local production, create more jobs, and invariably enhance the livelihoods and wellbeing of Nigerians,” according to a statement by Think Business Nigeria.
It said in 2021, when the sugar tax was first implemented, the manufacturing industry suffered major setbacks, with as much as 8 percent to 10 percent decline in profit, with the Food and Beverage sub-sector experiencing a negative GDP growth.
“By all indications, the proposed tax hike threatens to disrupt the demand dynamics and discourage investments in sugar sector and that could ultimately hinder progress towards achieving local sugar sufficiency targets outlined in the Nigerian Sugar Master Plan (NSMP),” the group said.
When the Federal Executive Council approved the extension of the National Sugar Master Plan by 10 years, the vision was that the demand for refined sugar will boost investments in the sector and lead the country to attain at least 70 percent of self-sufficiency in sugar production in the shortest time.
Despite the government’s endorsement of the NSMP, signalling a commitment to diversifying the economy through agriculture and industrial manufacturing, it is obvious that any significant increase in the SSB Taxes will undoubtedly pose a significant obstacle to attaining its objectives.
At the expiration of the first phase of the masterplan, not many investors were excited to buy into the lofty policy. They have not keyed into the Sugar Masterplan because it takes some time to recoup the investment in the sugar industry and of course, they were also afraid of policy inconsistency.
Former Executive Secretary of the National Sugar Development Council (NSDC), and who coincidentally is the current Executive Chairman of the Federal Inland Revenue Service (FIRS), Dr.
Zaccheus Adedeji, when he still held sway at NSDC, said that the backward integration programme under the Nigeria Sugar Master Plan had recorded a total of $1 billion investments as of 2022. The investments, he said, were made by the bigwigs in the sugar production industry, which comprised Dangote Sugar, BUA Foods Plc and Flour Mills of Nigeria.
Adedeji admitted that the objective of NSMP has not been fully achieved; and it couldn’t have been, not with the level of investments recorded during the 10-year period.
According to him, the NSMP has had to force indigenous companies to significantly raise investments in backward integration programme in sugar plantation farming and processing.
Critics of additional taxes on SSBs emphasize the interconnectedness of economic prosperity and human well-being, noting that there are several health-related issues that crop up when people are not economically or financially buoyant – affecting their mental and physical health. “It is important for the government to ensure that the industry is further safeguarded against actions that could potentially throw more people out of jobs as companies struggle to survive,” they said.
The Executive Secretary/CEO, National Sugar Development Council, Mr. Kamar Bakrin, in an interview, said the campaign to tax sugar sweetened beverages is not in alignment with Nigeria’s current and most important priorities.
According to him, “Sugar is a strategic industrial and household commodity with the ability to generate hundreds of thousands of jobs across its extensive value chain.”
He said the Industry has the potential to be a key contributor to Nigeria’s economic growth. “The sugar value chain creates linkages between agriculture and industry required for inclusive growth, by enabling increased yield and output and providing higher-paying off takers/buyers for sugarcane through out-grower schemes,” he said.
Mr. Bakrin said Sugar and its by-products are key inputs in the production of a growing list of products including food, beverages, animal feed, pharmaceutical products, polymers, packaging materials, etc. “The availability of local supply sources greatly reduces the vulnerability of these sectors to external shocks, thus enhancing our nation’s security,” he said.
He noted that the goal of the Nigeria Sugar Master Plan (NSMP) is to grow local production of raw sugar to two million metric tons per annum, create over 100,000 jobs from the production of sugar and its by-products and eliminate the demand for foreign exchange for their importation.
“Every Government has competing interests, and it takes decisions based on its highest priorities. Nigeria is at a critical inflexion point and is currently addressing significant
challenges such as unemployment, food insecurity, rising prices and loss of purchasing power from the devaluation of the naira and dependence on imports.
“Our current per capita consumption of sugar is about 8kg per annum, far below the global average and far behind industrialized countries such as the United States, Germany and the United Kingdom who have per capital consumptions of 46kg, 37kg and 30kg per annum respectively.
For industry stakeholders, despite the renewed clamour for these taxes with the hopes that it will encourage lifestyle changes and improve health, it is important to note that the claims are not evidence based.
According to them, “There is in fact no real-world evidence that supports the claims that taxation of soft drinks will reduce obesity or NCDs. The most recent assessment of SSB taxes effectiveness undertaken by WHO’s Guidelines Review Committee confirms the lack of evidence and WHO is still unable to grade SSB taxes as a best buy-intervention.
When contacted, the Special Adviser on Media to the Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr. Dare Adekanmbi said he is not aware of any plan to increase SSB tax adding that if there is need to increase it, the public would be properly informed.