The World Bank has asked the Federal Government to issue a presidential order raising excise duties on “sin goods” such as alcohol, tobacco, and sugary drinks as a key requirement under the $750m loan granted to Nigeria to reform its non-oil revenue mobilisation efforts.
This requirement was captured in the World Bank’s latest Implementation Status and Results Report for the “Accelerating Resource Mobilisation Reforms Programme-for-Results”, which became effective on October 14, 2024, and is expected to close by November 2028.
A copy of the report was obtained by The PUNCH from the bank’s website. In its latest implementation review for the Accelerating Resource Mobilisation Reforms Programme, the bank stated that the disbursement of at least $10m is tied to the issuance of this presidential directive.
The reform programme aims to raise Nigeria’s non-oil revenues while safeguarding earnings from the oil and gas sector. As of May 2025, Nigeria has only received $1.88m, representing 0.25 per cent of the total loan amount.
However, six disbursement-linked results worth $235m have reportedly been achieved and are awaiting verification. The bank noted that “a Presidential order increasing excises on ‘sin’ goods, in place,” is the formal verification required to unlock the fund attached to this result, while noting that excise rates on sin goods are very low.
The PUNCH observed that Nigeria currently imposes excise duties on tobacco, alcoholic, and non-alcoholic beverages, with recent increases introduced from June 1, 2022. Tobacco products attract a 30 per cent ad valorem tax plus a specific rate rising annually from N4.2 per stick in 2022 to N5.2 in 2024.
Alcoholic beverages such as beer, wines, and spirits are taxed through specific rates per litre, increasing each year through 2024, alongside a 20 per cent ad valorem rate for wines and spirits. A N10 per litre duty applies to non-alcoholic and sweetened beverages, while a five per cent excise on telecom services was introduced but suspended.
However, Nigerians are set to face increased costs for telecom services after the president’s approval of the Nigeria Tax Bill 2024, which reintroduces a controversial 5 per cent excise duty on telecom services.
The bill, passed by the Senate on May 8, 2025, will increase the price of mobile calls, text messages, and data services for consumers. This new tax, along with recent tariff hikes, has raised concerns within the telecom sector.
Operators warn that the move will burden consumers and hamper the country’s efforts to broaden digital inclusion. The excise duty was first introduced in the Finance Act of 2020 under former President Muhammadu Buhari.
It was part of an effort to expand the scope of excise taxes, but was met with strong opposition from telecom operators and consumer groups. They argued that the tax would add to the already high cost of essential services in a struggling economy.
In response to these concerns, President Bola Tinubu suspended the tax in July 2023, citing its potential to worsen inflation and restrict access to digital services. However, the excise duty is now set to return as part of a broader tax reform initiative, as the Senate passed the bill in May 2025.
The bill mandates that both domestic and international telecom providers offering services in Nigeria collect and remit the five per cent tax, which will ultimately be passed on to consumers.
The PUNCH further observed that the sin tax reform, listed under DLR 3.1, has yet to be implemented, and the World Bank warned that its absence could adversely impact subsequent revenue targets. DLR 3.2, which measures actual additional revenues generated from such excise taxes, remains incomplete.
The World Bank report read, “The government has not yet adopted legislative orders to reform excises on pro-health goods and services (DLR 3.1). This may adversely impact revenue targets from pro-health taxes (DLR 3.2).”
The bank’s team urged the government to “accelerate the procurement of the Independent Verification Agent” to fast-track the confirmation of these achieved milestones.
The report stated that although the Trade Tariff Committee and the Presidential Committee on Fiscal Policy and Tax Reforms have plans to adopt a health tax increase framework effective January 2026, discussions on the matter have not commenced.
It said, “TTC and PCRPTR have plans to adopt a framework to increase health taxes effective January 2026, but joint discussions have not yet started.”
The World Bank also linked disbursement of another $30m to the implementation of green taxes (DLR 3.4), but Nigeria has yet to reach a consensus on this.
“There is still no consensus among key government agencies responsible for the reform,” the report stated, citing ongoing debates over excise duties on heavy vehicles with engines larger than 2.0 litres and the possibility of a 10 per cent carbon tax on petroleum products proposed by the presidential tax committee.