Case Study:

Efficacy of fiscal measure in controlling or regulating the consumption of Tobacco in Nigeria

Abstract:
Tobacco use is a substantial risk factor for chronic diseases in Nigeria, as well as a significant
economic burden. Despite signing the Framework Convention on Tobacco Control (FCTC), the
policy that complies with it was only created in 2015. Funding constraints and conflicts of
interest are two obstacles. The Federal Ministry of Health created the current policy, which
address all four WHO "best buy" treatments. Nigeria's public health and economy will gain from
stepping up efforts to implement "best buys" policy recommendations.
Literature Review
Tobacco use continues to be a major global contributor to the burden of preventable diseases.
While the percentage of smokers in Nigeria may have decreased in recent years, the country
still has one of the highest rates of active smokers in Africa. The prevalence of sickness and
financial consequences of cigarette smoking in Nigeria are poorly understood. As a result, there
is insufficient data to guide the creation and execution of a successful tobacco control policy.

In Nigeria, tobacco use has been increasing, and it is one of the main risk factors for non-
communicable diseases (NCDs). As per the findings of the 2012 Global Adult Tobacco Survey,
4.7 million adults in Nigeria who are 15 years of age or older, or 5.6% of the population,
currently use tobacco products (10.0% of males and 1.1% of women). Moreover, 2.9% (2.4
million) of Nigerians smoked tobacco every day, and 3.7% (3.1 million) presently smoke
tobacco. Furthermore, there is a strong chance that the number of smokers in Nigeria may rise
quickly. A nationally representative poll of Nigerian adolescents between the ages of 13 and 15
found that between 3.6 and 16.2% of them had experimented with smoking. Before turning 20,
almost 60% of men between the ages of 20 and 34 who had ever smoked did so every day,
while 55.3% of current daily tobacco users did so within 30 minutes of waking-up. Exposure to
second-hand smoke was reported to be highest among those who visited restaurants;
estimated at 29.3% of
6.4 million adults. These data indicate high consumption and may contribute to the incidence
and deaths from non-communicable diseases. In 2012, 102,100 new cases of cancer were
reported in Nigeria with prostate and liver cancers accounting for over half of the new cases
and these are associated with tobacco use. Furthermore, a total of 792,600 deaths from NCDs
were reported during the same period. These may have significant consequences on the
country’s socio-economic development.

The Nigerian Senate passed a measure on March 15, 2011, that will soon be signed into law and
govern the manufacturing, sale, sponsorship, advertising, and promotion of tobacco and
tobacco products. This proposed law is a step in the right direction toward solving Nigeria's
tobacco problem and lowering the prevalence of all tobacco-related illnesses. Additionally, it
offers a rare chance to domesticate the Framework Convention on Tobacco Control (FCTC)
established by the WHO. The bill's key provisions are as follows: a National Tobacco Control
Committee to oversee the implementation of current and future tobacco control policies; a
complete prohibition on smoking in public areas; tax stamps on cigarette packs that are easily
visible; prohibitions on sales to and by minors; and a complete ban on advertising, sponsorship,
and promotion. A significant policy gap though is the failure of the bill to address the problem
of smokeless tobacco. Experience from developed countries has shown that policies specific to
smokeless tobacco must be developed and implemented to ensure successful tobacco control.
The Euromonitor has predicted a 7% growth in volume for cigarette from 2010–2015 and an
astounding 77% growth for smokeless tobacco for Nigeria.
Introduction

In Nigeria, as in many other Sub-Saharan African nations, tobacco use is still a problem for
public health, having an impact on both the general well-being of the populace and the
country's economy. According to a meta-analysis and systematic review of the burden of
current tobacco use in Nigeria, the prevalence of ever and current tobacco use was 17.7% and
10.4%, respectively, between 1995 and 201520. With the negative implications of tobacco use
on public health and its resultant influence on government spending on healthcare services as a
result of illnesses induced by tobacco use, this corresponds to more than 11 million smokers
during that period, which is worrying.
In the majority of African nations, cigarette sales are constantly rising. Smoking rates, however,
are far lower than in wealthy nations. In light of the pressing need to treat infectious diseases
and the relatively lower prevalence of smoking, tobacco control programs have not received
much priority. Nigeria serves as an example. A proactive approach is needed to stop smoking
rates from rising, and this includes changing the excise taxing policy significantly. The nation has
taken its time acting. The tobacco excise tax rates were raised the previous year. However, the
rise was minimal and is still far less than the 70% excise tax burden that the World Health
Organization (WHO) recommends be applied to typical retail prices.

The World Health Organization led international tobacco control and NCD prevention initiatives
in an attempt to lower tobacco use, which resulted in the creation of the WHO Framework
Convention on Tobacco Control in 2005. The Action Plan for the Global Strategy for the
Prevention and Control of Non-Communicable Diseases was approved by the World Health
Assembly in 2008 and outlined steps to be taken between 2008 and 2013 to address the
increasing public health burden of NCDs."Actions undertaken by sectors outside the health
sector, possibly, but not necessarily, in collaboration with the health sector, on health or
health-related outcomes or the determinants of health" is the definition of the Action Plan,
which binds governments to a set of multi-sectoral initiatives. The WHO suggested policies in
addition to multi-sectoral action. Constrained countries. This policy guideline followed the
recognition that the global epidemic of NCDs can be reversed through modest investments in
“best buy” interventions which will produce accelerated results in terms of lives saved, diseases
prevented
and heavy costs avoided. For tobacco control, the WHO ``best buy” interventions include tax
increases on tobacco products; smoke-free indoor workplaces and public places; bans on
tobacco advertising, promotion and sponsorship; mass media campaigns on the harms of
tobacco use and secondhand smoke and health information and warnings. Nigeria is a member
state of the WHO and signatory to the resolutions and conventions adopted at the World
Health Assembly (WHA) and other meetings to reduce the harmful use of tobacco, such as the
Framework Convention on Tobacco Use Control 2003; WHO African Region Ministerial
Consultation on NCDs April 2011; and the United Nations General Assembly September, 2011. It
is therefore expected that recommendations from these global commitments would be
incorporated in the policy making processes for tobacco control in Nigeria. Adopting multi-
sectoral action in policy formulation is critical to the success of any policy that has underlying
factors beyond the health sector. Evidence exists for successful. (Oladimeji Oladepo, Mojisola
Oluwasanu & Opeyemi Abiona, 2018).

In the last few years, Nigeria has seen a substantial change in the marketing and usage of
smokeless tobacco. 2010 saw the launch of "Zip," a Swedish-style snus produced by JTI
subsidiary West African Tobacco. This was a significant step. These days, there are two varieties
available for purchase: the regular Zip and the mentholated Zip Cool, which tries to capitalize
on Nigerians' penchant for mentholated tobacco goods. Its estimated 12 tons of sales in 2010
were worth at NGN 0.1 billion, or $634,328. The market for smokeless tobacco products is still
in its infancy and is primarily distributed through independent small grocers, which are
essentially kiosks that sell a variety of foods, beverages, and tobacco products. It has not
expanded to include other channels like supermarkets.
Recently introduced packaged and mentholated smokeless tobacco product in Nigeria.

Cigarette pricing and warning labels in Nigeria

As of June 2011, the price of the lowest priced 20 cigarette-pack in Nigeria was about NGN50
(approx. $0.32) while premium cigarettes were sold for about NGN200 (approx. $1.27).
Increasing retail cigarette prices in Nigeria may decrease smoking and smoking-related disease,
particularly among children who are price sensitive, and would also generate revenue for the
government. Cigarette packs in Nigeria currently contain text-only warnings; “The Federal
Ministry of Health warns that smokers are liable to die young”, which covers approximately
30% of the front and 40% of the back. Domestication of Article 11 of the WHO FCTC regarding
pictorial warning labels may result in a reduced prevalence of youth smoking in Nigeria.
Pictorial warnings, when used appropriately evoke negative emotive feelings of fear and
disgust, and are readily understood by a diverse audience regardless of age or secular
education. Graphic package warning labels comprised of a picture embedded with a text
message relevant to the picture can be integrated with larger interventions such as mass media
campaigns to educate smokers and prevent smoking initiation (Israel Agaku, Adisa Akinleye, &
Akinbode Oluwafemi)
Front and Back views of Cigarette pack in Nigeria showing text-only warning labels

Impact on the Economy

The effects of tobacco smoke spills over from health to economic and social well- being. It is
vastly accepted that tobacco use and poverty are intertwined and their presence could forestall
economic development. In the poorest of households, especially in low-income countries, as
much as 10 percent of total household expenditure is spent on tobacco, making money less
available for other basic items such as food, education and health care. In 2015, the economic
losses incurred by tobacco smoke in Nigeria were estimated at 591 million dollars. With a rising
smoking prevalence of 4 percent each year; from 11.3 percent in 2000 to 17.4 percent in 2015,
the question of tobacco control is one the Nigerian policy space
can no longer shy away from. Blog (https://cseaafrica.org/category/blog/)
The Table shows the annual GDP, the estimated economic burden of tobacco consumption and
its proportion to GDP, for the years 2013–2020. The economic burden attributable to tobacco
consumption was the highest in 2014 at $1.55 billion and was the lowest in 2018 at $1.06
billion. In 2017, the economic burden of tobacco consumption as a proportion of GDP was
0.31%, which was the highest across the years. The lowest economic burden attributable to
tobacco consumption was 0.26% of GDP in 2019. On average, the economic burden attributable
to tobacco use was 0.28% of GPD between 2013 and 2020, in Nigeria

How then do we control this widespread?

Among several control measures such as banning smoking in public places; restricting sale to
certain populations; effectively controlling borders from smuggled products etc., the World
Health Organization (WHO) considers tobacco taxation as the most effective control tool.
Tobacco taxation has the potential of simultaneously delivering on the tasks of reducing
tobacco consumption, improving public health and raising substantial government revenues
that can be used to fund tobacco control projects.
The impact of raising tobacco taxes
According to the table below, during the following ten years, a 50% increase in cigarette prices
might avert almost 30,000 fatalities, 13,000 heart attacks, 5,562 new cancer cases, and 21,049
strokes. Moreover, an estimated ₦ 966,615 million in financial resources could be produced;
this amount is derived from savings in healthcare costs (₦ 474,712 million), costs avoided from
productivity loss and informal caregivers (₦ 63,688 million and ₦ 59,147, respectively), and
increased tax revenue from tobacco sales (₦ 369,068 million). It is important to note that, on
the assumption of a perfect pass-through between price and excises, these advantages might
be accounted by a 168% rise in tobacco taxes. Furthermore, should the illegal trade in tobacco
products continue to grow, there may still be 92% of the total economic gains after the price
increase through taxes.
Table 1
Economic consequences of smoking and the potential effects of price increase– 2020
Economic consequences of smoking
Category ₦ (millions)
Total health expenditure (THE) 4,422,604
Gross domestic product (GDP) 121,167,234
Tobacco-tax collection 36,300
Smoking-attributable direct costs of treatment 526,457
Treatment costs as % of GDP 0.36%
Treatment costs as % of THE 9.63%
% Of treatment costs recovered with taxes 6.90%
% Of total costs recovered with taxes 5.73%

Scenarios for price increase: 10 years effect for different % increase

% Increase in final price of a package 25% 50% 75%
Deaths prevented 15 454 30 908 46 361
Heart disease avoided 6 392 12 784 19 175
Number of Strokes avoided 10 525 21 049 31 574
New cases of cancer avoided 2 781 5 562 8 342
New cases of COPD avoided 23 919 47 838 71 757
DALYs avoided 520 37 1040 747 1561 121
Health costs avoided ₦237,356.00 ₦474,712.00 ₦712,068.00
Informal caregivers’ costs avoided ₦29,573.00 ₦59,147.00 ₦88,720.00
₦: Nigerian Naira, exchange rate ₦ 306 = U$D 1, DALY: disability-adjusted life-years, GDP: gross
domestic product, THE: total health expenditure.

Two extra situations are presented, one as a conservative after an increase in prices of 25%,
and another hopeful scenario where the rise of tobacco price is 75%. Concerning the previous,
the economic benefit could reach ₦ 521 billion with ₦ 222 billion being due to increase in the
tax collection, reaching more than a half of the benefit but with an increase of the tax rate 84
pp. lower according to the current percentage of price that are. In the latter, reaching a 75%
price increase would lead to an increase in tax collection of 120%, showing that there is still
place to increase fiscal and health benefits at the same time, due to the low starting tax levels.

Is the influence of Nigeria’s New Tax Policy Substantial Enough?

Recently, the Nigeria government approved an additional ₦1 specific tax on each stick of
cigarette (₦20 per pack), which would increase to ₦2 per stick in 2019 (₦40 per pack) and
eventually ₦2.90 per stick in 2020 (₦58 per pack) while maintaining the current 20 percent ad
valorem tobacco excise duty rate. This new excise duty on tobacco which amounts to a 17
percent excise tax burden is still way below the WHO recommended 75 percent excise tax
burden. No doubt, this policy decision reflects the commitment of the Government to tackle
the tobacco endemic, reduce cigarette consumption and improve public health. However, the
new excise tax burden of 17% is not substantial enough to deliver on effective tobacco control.
(May 31, 2018 CSEA Africa)
Policy recommendations for tobacco control in Nigeria
Several particular legislative initiatives to support effective tobacco control in Nigeria.
The federal, state, and municipal governments must work together to execute and
enforce the legislation. State and local law enforcement agencies must cooperate to
make sure that organizations, businesses (such as hospitality venues), and individuals
within their jurisdictions fully comply with the policy, even though the federal
government should oversee the ban's adoption and implementation. Implementing the
smoking ban ➢ A prohibitive fine of up to N5000 ($30) is imposed for smoking in public
places, which includes public buildings (like hospitals and schools); cars (like trains and
buses); daycare centers; and any area 20 feet or less from such designated spaces.
➢ Owners of hospitality venues who neglect to enforce smoking bans within their
establishments risk fines of up to N20,000 ($120) for the owner and up to N5,000 ($30)
for the main offender.
➢ It should be mandatory for all hospitality establishments to erect signs that forbids
smoking in prominent locations, such as doorways and well-lit areas both inside and
outside of their buildings. In hospitality settings, ashtrays and their equivalents, like
mugs or candleholders, are strictly prohibited.
➢ Law enforcement personnel from local, state, and federal agencies conduct sting
operations, especially at nightclubs, to guarantee complete adherence to the law.
Owners who commit offenses for the third time run the possibility of losing their ability
to run hospitality establishments and facing fines of up to N50,000 ($300). ➢ All public
areas should prominently display toll-free numbers that can be used for calls and/or
texts. The best numbers are those that are simple to recall, like 0803 SMOKER. In the
event that a policy is broken, the public should be able to contact law enforcement via
phone or text message. Limiting sales, advertising, and illicit commerce
➢ No sale of tobacco products to or by minors under 18. Sale of cigarettes or smokeless
tobacco products shall be restricted to adults possessing valid government issued identification
such as a driver’s license, National ID card, or voter’s license card. ➢ Prohibit sale of cigarette in
single sticks. We further propose increasing the retail price of a standard cigarette pack from
N50 ($0.3) to N280 ($1.72)

Results
We have not limited the sources of information in the literature search to any particular time
frame. A complete national tobacco control policy that complies with the Framework
Convention on Tobacco Control (FCTC) was finally produced in 2015, ten years after Nigeria
joined the FCTC, despite the fact that the idea for such a policy date back to the 1950s. The
main obstacles that hampered the policy-making process were a lack of finance and a conflict of
interest (between the economic benefits from the tobacco business and safeguarding citizens
from the detrimental effects of tobacco use). Presently in effect, tobacco policies created by the
Federal Ministry of Health encompass all four of the WHO's "best buy" initiatives and were
established through robust multi-sectoral collaboration. "Best buy" tactics and limited multi-
sectoral interaction were features of other policies.
Of the total economic burden of non-communicable diseases, 0.07% was attributable to
smoked tobacco and 0.004% was attributable to smokeless tobacco use among males, while for
females the values were 0.005% for smoked tobacco and 0.002% for smokeless tobacco use.
Between 2013 and 2020, the total direct cost (US$) attributable to smoked tobacco use for the
current health expenditure category was $9.37 billion, while for smokeless tobacco it was
$749.66 million. Combined, the economic burden of tobacco uses between 2013 and 2020 was
$9.45 billion. On average, the economic burden attributable to tobacco use accounted for
0.28% of total GDP between 2013 and 2020 in the country. (Folashayo I.P. Adenij 2023)
Center for the Study of the Economies of Africa, with our support at the WHO Framework
Convention on Tobacco Control Knowledge Hub on Tobacco Taxation, used a tobacco excise tax
simulation model to evaluate the impact of various changes in the tobacco excise tax structure
on government revenue and smoking prevalence.

The initial results show that targeting an excise tax burden of 75% – taking into account
different economic growth rates and industry pricing response – would result in an
approximately 20% drop in cigarette consumption. As tobacco is an addictive substance,
consumers will continue to spend on cigarettes, but less so. The simulation also showed that
once the higher tax burden is reached, government revenue from tobacco excise taxes would
increase by more than 100%. It’s reasonable to assume that this level of change would need to
be phased in over a couple of years. For instance, in 1994 South Africa announced that it
wanted to reach an excise tax burden of 50% by the late 1990s. This resulted in more than
100% increase in government revenue and 30% drop-in aggregate smoking rates in 10 years.

Methodology

The Center for the Study of the Economies of Africa with support at the WHO Framework
Convention on Tobacco Control Knowledge Hub on Tobacco Taxation, Population Medicine,
PubMed, UNODC, Google Scholar, and published studies were consulted in the process of
gathering and compiling data. The case study method is applied, and the data source was an
examination of pertinent publications and papers about Nigeria's tobacco policy-making
process. In order to find published peer-reviewed articles, I searched databases on PubMed,
Google Scholar, Web of Sciences, and Cochrane Library. These databases were specifically
chosen because they include a broad variety of health and policy research that are relevant to
the topic of this study. In order to combine these terms with considerations about the study's
case, a variety of keywords were used, including Nigeria, tobacco control, the National Tobacco
Control Act, health policy, agenda-setting, policy implementation, tobacco tax, smoke-free,
smokeless tobacco, advertising, and tobacco health warnings. There was no date constraint on
the search. The literature was chosen using the purposeful sampling technique, and further
published studies on tobacco control policy in Nigeria were chosen by searching the references
of the chosen literatures using snowballing.

Conclusion
More extensive research on Nigeria's tobacco control laws has demonstrated that raising
tobacco taxes as a budgetary tool has been successful in lowering smoking rates and deterring
tobacco use. The government's authority over tobacco control must be upheld until the WHO-
recommended standard is met. Tobacco use significantly affects both health and the economy
in Nigeria. Taxing tobacco more heavily might lessen this load and have positive net economic
effects. The Nigerian economy, as well as public and population health, will gain from stepping
up efforts to fully adopt "best buys" policy suggestions to restrict tobacco use in the nation,
given the study's clear indication of the significant economic impact of tobacco use. The
knowledge gathered from this study's conclusions will help to promote investments in public
health that will prevent and manage tobacco use's negative impacts on health and the
economy. The employment of legislative and economic measures to slow the rise in tobacco
use have been shown to be successful tactics in reducing tobacco use worldwide. Regular
increases in excise taxes serve as one example of an economic strategy.

References

WHO Framework Convention on Tobacco Control (FCTC)

Economic burden of tobacco consumption in Nigeria, 2013–2020: A prevalence-based

attributable-risk approach (Population Medicine)

Tobacco control in Nigeria (PubMed Central)

A health policy analysis of the implementation of the implementation of the National Tobacco
control act in Nigeria (Echezona Ejike Udokanma, ikedinachi Ogamba, and Cajettan llo)

(https://cseaafrica.org/category/news-)

Tobacco control in Nigeria- policy recommendations (Israel Agaku, Adisa Akinleye , & Akinbode
Oluwafemi, 2012 published online)

Oladepo et al. BMC Public Health 2018

BMC Public Health, Article 959: (Analysis of tobacco control policies in Nigeria: historical
development and application of multi-sectoral action (Oladimeji Oladepo, Mojisola Oluwasanu
& Opeyemi)

Blogs: Why Nigeria needs a huge tobacco tax hike to curb smoking. 25th February 2020

Economic burden of tobacco consumption in Nigeria, 2013–2020: A prevalence-based

attributable-risk approach. (Folashayo I.P. Adenij)

Research gate (Tobacco Control Legislation and Policy in Nigeria: Much Barking without Biting
Article · January 2018)