Nigeria owed $73.2 billion to external creditors and N22.43 trillion ($61.86 million) locally as of September 30, 2018, records by the country Debt Management Office (DMO) show. As the country’s debt increases amid tardy revenue growth, Africa’s largest economy uses more than 50 percent of its earnings to repay debt, making it difficult to have enough for other necessary expenses without taking on further debt. Thus, the country is intensifying efforts to grow revenue, in a series of moves that may include the introduction of excise duty on carbonated drinks and an increase in VAT.
“Our objective is to be able to harness the existing revenue streams that we have by ensuring that enforcement is effective to expand the tax base and also to identify new revenue streams that we can add to expand the revenue base,” said Zainab Ahmed, the minister of finance.
“So in expanding the revenue base, we have proposed the increase of VAT but there are also other revenue streams that we are looking at and some of them include the introduction of excise duties on carbonated drinks but there is a process to doing these things,” she added.
Instead of joining in the international campaign like south Africa which says its tax on carbonated drinks is as a way of reducing consumption and other health-related problems, Nigeria sees this as a way of increasing its revenue.
In South Africa, tax on sugar-sweetened beverages is part of the department of health’s strategy to reduce obesity by 10 percent by 2020 and reduce non-communicable diseases. The tax as at December last year, had raised R2.3 billion ($160 million), which the government plans to use on public health campaigns.
Obesity is a serious health issue that puts people at a higher risk for serious diseases, such as type 2 diabetes, heart disease, and cancer. The chronic disease is a leading cause of kidney failure, cardiac arrest, strokes, leg amputation and blindness.
According to the Healthy Living Alliance, South Africa has the highest obesity rate in Sub-Saharan Africa, with almost 70 percent of women and 39 percent of men being overweight. Even the United Nations Children’s Fund says South Africa has the highest rates of obese children in the world, with 13 percent of obese children under the age of five living in the country.
Asides the issue of obesity, there is an alarming number of people suffering from diabetes in the country. As of 2017, over 1.83 million of the approximately 58 million South African populace suffered diabetes that is 5.4 percent of the adult populace.
The country ranks highest in sub-Saharan Africa on the global obesity scale but many of its neighbours are seen to be on a similar trajectory when it comes to the so-called lifestyle diseases such as type II diabetes. Experts say the average South African is unaware that a can of a soda can contain nearly 10 teaspoons of sugar.
There have also been increasing cases of obesity and other diseases caused by sugar in Nigeria, but there are no accurate data to back it up.
Although drinks are not the only containers of sugars, foods, especially those rich in carbohydrates do as well. The body breaks down or converts most carbohydrates into the sugar glucose. While South African government have said the tax is a step to curb obesity, scientists have rebuffed claims that sugar and the lack of exercise cause obesity.
Thanks to imposed sugar tax in different countries worldwide, American multinational food-manufacturing company, Kellogg’s, noted that it would reduce the sugar in its Rice Krispies and Coco-Pops cereals. Even Nestlé said it had reduced the sugar content of its Milo beverage by 32 percent and that Milo now contains less than 5 percent sucrose, equivalent to two teaspoons of sugar.
Sugar taxes may not be a panacea for obesity but South Africa’s sugar tax, which is fixed at 2.1c/g of sugar content exceeding 4g/100ml, has demonstrated that taxes on carbonated or sugar-sweetened drinks can be effective in persuading manufacturers to reduce sugar contents in their products.
Nigeria needs to borrow a leaf from this country in other to make the right decision.