Africa’s biggest economy, Nigeria, is raising excise duty on alcohol from June. The previous flat 20% duty on alcohol will be replaced with a tax per centilitre, set at specific rates for beer, wine and spirits.

The tax increase will be introduced gradually until 2020 in order to moderate the impact on prices of products.

Beer and stout would be taxed NGN0.30 ($0.00083) per centilitre in 2018, and NGN0.35 in 2019 and 2020.

Wine would attract NGN1.25 per centilitre in 2018 and NGN1.50 in 2019 and 2020.

Spirits would be taxed the most at NGN1.50 in 2018 and then NGN1.75 in 2019 and NGN2.00 in 2020.

The excise duty was approved by President Muhammadu Buhari on 11 March 2018 after Nigeria’s Tariff Technical Committee met with key industry players.

Minister of Finance Kemi Adeosun said:

“The Tariff Technical Committee recommended the slight adjustment in the excise duty charges after cautious considerations of the Government’s Fiscal Policy Measures for 2018 and the reports of the World Bank and the International Monetary Fund Technical Assistance Mission on Nigeria’s Fiscal Policy.”

This action is part of the Nigerian Government’s move to raise non-oil revenue since the country suffered financially from the sudden decline in oil prices in 2016.

Beer is a booming market for Nigeria. Euromonitor International estimated the country’s beer market was worth US$2.7bn at the end of 2016.

A government spokesperson said raising excise duty on alcohol would have ‘a dual benefit of raising the government’s fiscal revenues and reducing the health hazards associated with…alcohol abuse.’

The government claims the introduction of this duty also puts the country’s alcohol tax policy more in line with other members of the Economic Community of West African States regional bloc.

Adeosun added:

“Peer country comparisons were also carried out showing Nigeria as being behind the curve in the review of excise duty rates on alcoholic beverages.”

This move occurs in the context of beverage conglomerate Anheuser-Busch (AB) InBev announcing in November 2017 it plans to strengthen its Nigerian operation by spending $250m on a new brewery and launching its largest brand, Budweiser, in Nigeria. Production from the new brewery is expected from mid-2018.

AB InBev also plans to merge its three existing subsidiaries in Nigeria, which it inherited when acquiring SAB Miller, into one company called International Breweries.

The three breweries currently produce popular regional brands Hero Lager and Grand Malt.

This move by AB InBev will make Nigeria its second biggest portfolio in the continent after South Africa.