Nigeria is increasing taxes on cigarette and alcoholic drinks to generate billions and curb abuse

Nigeria, a highly religious country is the highest consumer of alcohol in Africa and one of the world’s top ten markets for alcohol. In the late 2000s, global beer brand Guinness revealed Nigeria as its largest consumer, overtaking even its home market, Ireland. According to the World Health Organization estimates, an average Nigerian consumes about 1228 litres of alcohol per annum.

Consequently, the country, through its Finance minister Kemi Adeosun has announced the introduction of taxes on cigarettes and alcoholic drinks produced in the country for the next three years beginning June.

She said, “The Tariff Technical Committee (TTC) recommended the slight adjustment in the excise duty charges after cautious considerations of the Government’s Fiscal Policy Measures for 2018 and the reports of the World Bank and the International Monetary Fund Technical Assistance Mission on Nigeria’s Fiscal Policy.

“Furthermore, peer country comparisons were also carried out showing Nigeria as being behind the curve in the review of excise duty rates on alcoholic beverages and tobacco.”

The excise duty attracts N1 per cigarette (N20 per pack) in 2018, N2 per cigarette (N40 per pack) in 2019, N2.90 per cigarette (N58 per pack) the following year. According to report, Nigeria, the regional manufacturing giant, produces an estimated 21 billion sticks annually and exports 9  billion of them to neighbouring Ivory Coast, Benin Republic and Burkina Faso. The country stands to earn N126 billion ($330 million) over the phase.

Beer, wines and spirits also attract N.30, N1.25 and N1.75, respectively per centilitre (Cl) in 2018. With an estimated (locally produced) beer and spirit consumption of 12.28 and 12 litres per annum, respectively, the government stands to pocket over N360 billion ($1 billion), over the duration.

Heineken NV (largely through Nigerian Breweries), Diageo (through Guinness Nigeria), and latest entrant AB Inbev with its Hero and Trophy brands, are the dominant players in the Nigerian alcohol market. British American Tobacco (BAT) is the market leader for tobacco in Nigeria and controls about 78% of the market share.