Africa’s largest economy, Nigeria said it will be raising excise duties on tobacco and alcoholic products across the country to reduce their consumption.
The country’s Finance Minister, Kemi Adeosun said it has received the approval of President Muhammadu Buhari to increase excise duties on tobacco and alcoholic beverages.
According to Reuters News, the move was aimed at achieving “a dual benefit of raising the government’s fiscal revenues and reducing the health hazards associated with tobacco-related diseases and alcohol abuse.”
Apart from its plan to reduce abuse of alcohol and tobacco, Nigeria is looking at diversifying its economy and its increase in taxes and other levies are the easiest way of doing that.
The country currently gets over 70% of its Forex inputs from crude oil exports.
This development might be a big snag on the viability of major alcohol producers in the market. Heineken’s Nigerian Breweries Plc, Diageo’s Guinness Nigeria Plc and AB Inbev’s Interfact Breweries are the three largest alcohol makers in the market. The category is yet to survive the aftershocks of the recession. The latest increase in tax will definitely lead to price inflation which will reduce consumption.
In its last financials, Dublin-based Heineken said its Nigerian unit continued to underperform due to a harsh economic condition.