Carbonated drinks excise duty regime: A case for sustainable environment

The report that the Federal Government has introduced an excise duty of N10/liter on all non-alcoholic, carbonated, and sweetened beverages is currently trending and generating reactions and counter-reactions across Nigeria. As a quick clarification to readers who might not understand what excise duty means, excise duty is a form of tax imposed on the production, licensing, and sale of goods.

During the public presentation of the 2022 Appropriation Act a few days ago in Abuja, the minister of Finance, Budget, and National Planning, Zainab Ahmed, hinted that the new policy on the introduction of excise duty of N10/liter on all non-alcoholic, carbonated and sweetened beverages is in the Finance Act signed into law by President Muhammadu Buhari on December 31, 2021.

Certain reports have it that sometimes in the year 2020, Hameed Ali, the comptroller-general of the Nigeria Customs Service (NCS) had also proposed the collection of excise duty on soft drinks.

The government has since discussed several reasons that necessitated the introduction of the said excise duty in the finance act. But as a practitioner in the environmental sustainability space in Nigeria, I feel the policy could as well be intertwined with the extended producer’s responsibility policy which was earlier drafted to support existing strategies in addressing environmental concerns as posed by the growing rate of plastic pollution and poor waste management infrastructure in the country.   

With the way the excise duty policy on carbonated beverages was introduced as a people-focused initiative, a deposit return scheme could have long been activated to further help boost recycling activities and cut down plastic pollution in Nigeria while also contributing largely to the country’s extended producers responsibility policy which was earlier drafted. It could have been N10/Bottle of all non-alcoholic carbonated beverages charged on manufacturers to make them take considerable responsibility for the waste generated after their products are consumed, and its packaging indiscriminately tossed into the environment. 

Over the years the plastic recycling industry in Nigeria has struggled to survive with quite a lot of players in the sector relying largely on aids and grants from foreign impact investors to carry out plastic waste collection through cleanup campaigns and ultimately plastic waste recycling across Nigeria. 

Building a sustainable model around curbing the damaging impact of plastic pollution on the environment in Nigeria is of utmost importance in the country that generates well over 2.5 million metric tons of plastic waste annually with well below 20% recycled. 

Currently, a kilogram of post-consumer plastic bottles is valued at N50. Interestingly about 32 pieces of plastic bottles make one kilogram, this leaves the value of a single plastic bottle at only a meager one naira fifty kobo (N1:50k) which is quite unattractive enough for an average resident to hit the street in the hunt for plastic waste in a country where a sizeable number of its population live below the poverty line of $2 per day. This also explains why residents prefer to dredge rivers and take sand while they ignore ocean-bound plastics littering seashores and riverbanks. Of course sand is currently valued way more than plastics.

Implementing a robust deposit return scheme policy for post-consumer plastic bottles in Nigeria will see the recycling industry reinvigorated and jumpstart the ailing circular economy drive of young and passionate players who have long looked forward to the decisive engagement of manufacturers of these carbonated beverages by the government to further domesticate the sustainable development goal 11 and 12 on building sustainable cities and communities alongside responsible production and consumption. 

It is exciting to note that one of the reasons highlighted by the government for this excise duty is to cut down on obesity and diabetes; It is however shocking that quite a large number of diseases like cancer and even death are traceable to plastic pollution not to mention worse cases of microplastics entering water sources at very alarming and dangerous levels putting the majority of residents at risk of ingesting toxins and ultimately leading to death.

In developed countries like America, manufacturers work more directly with the municipality or cities where they sell their products to and clearly state the amount each empty bottle of their product is valued at, when returned to accredited post-consumer plastic collectors. This value ranges between 50 cents to 1 dollar per bottle and has served as a huge morale booster for informal sector participation in plastic waste recovery across major cities like New York and California with very visible activities of “canners” as they are fondly called, a lot of whom go to bed with a full belly as assuredly the next day meal is guaranteed when they can recover plastic waste from the environment and deposit same at the accredited centers.

Plastic pollution in Nigeria has gotten to worrisome levels and a sustainable model that can be seamlessly integrated into the country’s extended producer’s responsibility policy is highly recommended. One of such approaches is the deposit return scheme, the fact that the government is highly concerned about resident’s health is much more reason to be concerned about the safety of the environment as its components (Air, Land, and Water) are pivotal to sound health and good life here on the planet earth.

In conclusion, implementing a relative excise duty for deposit return scheme will see a kilogram of waste plastic bottle valued at about N320, when a resident daily recovers ten kilograms (10 kgs) he goes home with an average of N96,000 only monthly which is well over 200 per cent higher than the approved minimum wage in Nigeria. Interestingly, just like President Muhammadu Buhari said in a very recent interview on Channels Television “I wish when young people go to school, work hard and earn a degree they don’t do it thinking that government must give them jobs. You get educated because an educated person is certainly better than an uneducated one, even in identifying personal problems. So education is not just a means to hang on to the government to give you a job and what the colonials indoctrinated on us to have a car, have a house and start work at 8 o’clock and close at 2 o’clock. No!”

The deposit return scheme policy will see a massive growth in the participation of Nigeria’s youthful population in the circular economy which will in return drive robust environmental sustainability while directly reducing pollution concerns and addressing the precarious youth unemployment problem that has long bedeviled the country.

• Amusa is the founder of WasteBazaar Ltd – a cleantech providing On-demand waste collection and incentive-motivating waste recycling service across major cities in Nigeria.