Fresh excise duty increase may erode purchasing power, cause avoidable job losses, CPPE warns

The Centre for the Promotion of Private Enterprise (CPPE) has warned that a new round of increase in excise duty may erode the purchasing powers of Nigerians and result in avoidable job losses.

The Centre gave the warning in a statement signed by its Director/ Chief Executive Officer, Dr. Muda Yusuf, on Monday, while reacting to the recent proposal by the Senate Committee on Finance to amend the Customs and Excise Act, for the purpose of increasing excise duty on non-alcoholic beverages.

It expressed concerns that the proposal was coming at a time manufacturers, small businesses, distributors, and retailers across Nigeria were grappling with unprecedented macroeconomic pressures.

The Centre noted that the nation’s manufacturing sector, which should be one of the largest job creators in the country, continues to be weighed down by inflation, escalating input costs, high energy prices, FX volatility, and weakened consumer demand.

It is, therefore, believed that going ahead with the proposal would be economically disruptive, socially harmful, procedurally flawed, and inconsistent with Nigeria’s broader development and industrial policy objectives.

The Centre argued that the non-alcoholic beverage industry had, over the years, absorbed significant shocks, including multiple tax adjustments and a steep rise in operating costs.

“Prices of non-alcoholic beverages have already risen by 200–300%, driven by inflationary pressures and prior excise policy changes.

“Many operators are struggling to stay afloat. SMEs, who form the backbone of the beverage value chain, face thinning margins, declining sales, and limited access to affordable financing.

“Introducing a new round of excise increases, at a time operators in the manufacturing sector are struggling to stay afloat would further weaken their operating capacity, reduce output, erode purchasing power and lead to avoidable job losses,” it argued.

CPPE warned that the nation’s economy cannot afford another wave of factory closures or layoffs at this delicate moment of recovery.

It noted that the proposed excise duty increase carries significant risks that extend beyond the beverage industry.

One of such risks, it stated, remains higher retail prices, which would further worsen the welfare conditions of the people and cause inflationary pressures in the consumer goods market.

The Centre also believed going ahead with the increase could constitute a serious threat to jobs and livelihoods.

“The beverage industry sustains thousands of jobs across manufacturing, supply chains, logistics, retail, and the informal sector. Any contraction in production or sales will have ripple effects, precipitating job losses at a time when unemployment remains a major national challenge,” it argued.

The Centre therefore called for the discontinuation of the proposed increase, since the present economic realities render the proposal counterproductive and potentially harmful to national economic recovery and the welfare of the people.