A Step Forward in Nigeria’s Health Financing
The Corporate Accountability and Public Participation Africa (CAPPA) has praised the Federal Government’s decision to develop a draft policy that will allocate revenues from excise taxes on alcohol, tobacco, and sugar-sweetened beverages (SSBs) for health financing. This initiative is seen as a crucial opportunity for the President Bola Ahmed Tinubu administration to leave a legacy of sustainable funding for Nigeria’s struggling healthcare system and protect the well-being of its citizens.
At a recent national health-financing dialogue in Abuja, Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, revealed that the government is finalizing a draft policy to direct excise-tax revenues from these harmful products into health financing. He mentioned that the policy is expected to be submitted to the Minister of Health and Social Welfare soon.
In response to this development, CAPPA highlighted reports from local and World Health Organisation (WHO) sources showing that Nigeria is facing severe underfunding of public health services. The country is also dealing with the growing burden of non-communicable diseases (NCDs), driven by excessive consumption of sugary drinks, salt, tobacco, and alcohol. These diseases are responsible for nearly 30% of all deaths in the country, making it a public health emergency.
By initiating the draft policy, the Federal Government has shown a commitment to addressing the rising prevalence of NCDs. However, CAPPA urged the government to take comprehensive action, not only by earmarking SIN Taxes but also by implementing the recommendations of the WHO and CAPPA to ensure the effectiveness of these taxes. This would involve setting tax rates high enough to reduce consumption, encourage product reformulation, and ultimately alleviate the health burden on the population.
The WHO recently advised Nigeria and other member states to increase the prices of sugary drinks, alcohol, and tobacco by 50% over the next decade through taxation. This measure aims to curb NCDs, which contribute to illnesses like diabetes and cancer, while generating critical revenue for public health. The call was part of the WHO’s “3 by 35 Initiative,” a global effort aimed at addressing the strain on health systems due to rising NCDs, shrinking development aid, and increasing public debt.
According to the WHO, NCDs such as heart disease, cancer, and diabetes account for more than 75% of all deaths worldwide. A one-time 50% price increase on these products could prevent 50 million premature deaths over the next 50 years.
Calls for Higher Tax Rates
Akinbode Oluwafemi, Executive Director of CAPPA, commended the Tax Reforms Committee for its courage and vision in drafting the policy. However, he warned that unless the health taxes are raised to an effective threshold, the policy may not achieve its intended goals.
“We commend the government for proposing to earmark the revenues from SIN tax to public health, as long advocated by WHO, CAPPA, and other pro-public health civil society organisations in Nigeria. However, we must emphasize that in the case of sugary drinks, the impact of this draft policy will only be maximized if Nigeria significantly raises SSB tax from the current N10 per litre to at least N130 per litre, adjustable to inflation,” Oluwafemi said.
He pointed out that the current N10 per litre excise duty, introduced under the 2021 Finance Act, is grossly inadequate. At N10, the tax represents only about N3.33 on a N300, 50cl bottle, less than 1% of the retail price. Such a low rate cannot effectively discourage excessive consumption or generate significant revenue.
CAPPA has consistently recommended, based on available evidence and in-depth research, that the current excise duty on SSBs is insufficient. The organization believes that raising the tax to a more meaningful level is essential to achieving the desired impact on public health and generating the necessary funds for the healthcare system.