Implementing Nigeria’s Sugar-Sweetened Beverage Tax to Harness Domestic Resources for Health
By Uche Nwagboso (Lead Writer)
In 2021, the Federal Government of Nigeria introduced a Sugar-Sweetened Beverage (SSB) tax. It is embedded in the Finance Act of 2021, which levies a ₦10 tax on each litre of all non-alcoholic and sugar sweetened carbonated drinks. Fiscal policies like this can help curb the excessive consumption of sugars as was seen in Mexico, which would have a positive benefit on population health, especially in the prevention of non-communicable disease (NCD) like diabetes and chronic kidney disease. There is also the potential benefit of revenue generation, which can be channeled towards financing Nigeria’s health sector.
While the SSB tax enforcement structure and timeline for implementation is yet to be determined, PharmAccess Foundation, in collaboration with the World Bank and Nigeria Health Watch, recently organised a policy dialogue titled, ‘New Health Financing Approaches in Nigeria: Implementation of Sugar-Sweetened Beverage (SSB) Tax in Nigeria’ where panelists and attendees from the private, public, and non-profit sectors assessed the progress of the implementation of the SSB tax; explored strategies to utilise pro-health taxes as an additional source for health financing in Nigeria; and discussed feasible mechanisms to guarantee the implementation of the tax across Nigeria, to ensure Nigerians have equitable access to affordable and quality health care services.
Funding an underfunded health sector
In her welcome remarks, Njide Ndili, Country Director, PharmAccess Foundation, noted the urgent need to have conversations around local resource mobilisation, particularly as donor funding declined during the COVID-19 outbreak, as countries were focusing on their own domestic objectives. She commended the Minister of Finance, Budget and National Planning for the enactment of the SSB tax and stressed the need to ensure that “we achieve the purpose of this tax which is local resource mobilisation towards the health sector”.
At least 54 countries — five in Africa — have introduced an SSB tax and while the primary focus should be on the health benefits of imposing a sugar tax, the secondary benefit is the use of the funds as a source of domestic resource mobilisation, particularly in low- and middle income countries where the fiscal space is very tight and the health sector is underfunded.
Presenting his keynote address, Professor Mohammed Nasir Sambo, Executive Secretary and Chief Executive Officer, National Health Insurance Authority (NHIA) reflected on the Abuja Declaration noting that the 2022 health budget allocation was only five percent of the total budget which is abysmally low. “This underscores the need for us to explore innovative and sustainable financing mechanisms that we can harness to channel towards healthcare financing that will help us attain Universal Health Coverage (UHC),” he added.
Making it count
According to a 2019 report by the Task Force on Fiscal Policy for Health titled, ‘Health Taxes to Save Lives’, raising the price of sugary beverages by increasing excise taxes reduces consumption and saves lives. But at ₦10 per litre, Dr. Olumide Okunola, Senior Health Specialist, World Bank, said Nigeria’s SSB tax is not significant enough to change behaviour and suggested an upward review.
The conversations were robust and engaging and after two highly interactive panel discussions during which it was agreed that the health sector required additional innovative funding mechanisms; and bottlenecks to achieving this were identified and resolved, some of the action points proposed include;
- The SSB and other pro-health taxes are health-related, so they should be allocated to the health sector, to fund the prevention and treatment of non-communicable diseases (NCDs) and provide financial protection for Nigerians.
- The Finance Act should be improved to address how the generated SSB tax will be utilised.
- Advocacy should go beyond SSBs to focus on the entire pro-health taxes which include alcohol and tobacco. The phased increase in the proportion of pro-health taxes should also be reintroduced.
- The SSB tax is too low to achieve deterrence from consumption of unhealthy products. The percentage should be increased to effectively reduce consumption of SSBs.
- The Federal Government should design a robust framework for the utilisation of the earmarked funds from the SSB tax at the national and sub-national level and monitor the state governments to ensure value for money and adherence to the guidelines.
- Pro-health taxes should be allocated to the health sector. The Ministry of Health should be involved in decisions on how the pro-health taxes are allocated before the money is generated.
- The Federal Government should focus on funding an explicit package of health for the people through the existing channels.
- States should be carried along in the decision-making on the collection and utilisation of the SSB tax to secure their support in the implementation of the tax.
- The Budget Office of the Federation should develop inter and intra-sectoral criteria for the allocation of funds to ensure that high-priority sectors/agencies are adequately funded.