The Manufacturers Association of Nigeria (MAN) has cautioned that government plans to introduce a Tax Stamp System for excisable goods may compound Nigeria’s economic pressures, warning it could fuel inflation, suppress consumer demand, and undercut the country’s ability to compete under the African Continental Free Trade Area (AfCFTA).
In a statement signed by its Director General, Segun Ajayi-Kadir, on Tuesday, the association said the extra compliance costs from tax stamps would inevitably be passed on to consumers, many of whom are already struggling with high prices of essential goods.
“This will further shrink demand and push more people toward cheaper, illicit alternatives,” MAN said.
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The group stressed that the measure would raise production costs for local manufacturers, placing them at a disadvantage against imports from other African economies. With AfCFTA seeking to create a level playing field for intra-African trade, MAN said Nigeria risks losing ground if domestic manufacturers are forced to operate under a heavier cost burden than their continental peers.
Gains of the 2025 Tax Act Under Threat
MAN acknowledged that the Nigeria Tax Act 2025 had delivered some relief to businesses by consolidating multiple levies, simplifying compliance, and lowering the cost of doing business. But it argued that tax stamps could unravel those gains by creating a “hidden tax burden” inconsistent with the spirit of the reforms.
“The 2025 reforms were meant to ease the cost of doing business and encourage investment. Introducing tax stamps risks reversing these achievements and discouraging industrial growth,” the statement said.
The association also questioned the effectiveness of tax stamps as a tool for combating smuggling and counterfeiting. It argued that global evidence shows limited success, with vendors supplying stamp technology often emerging as the biggest beneficiaries, while industries and governments see little impact.
According to MAN, instead of curbing illicit trade, higher product prices could push more consumers toward unregulated markets, while the risk of counterfeit stamps entering circulation could further complicate enforcement.
Although no official announcement has been made, MAN said it has reliable information that the government is considering the policy based on vendor proposals linking tax stamps to the fight against illicit trade.
The association reminded policymakers that a similar proposal was first floated in 2018 but was unanimously rejected by stakeholders across the board, a precedent it believes the government should not overlook.
Digital Solutions Already Exist
The group pointed out that Nigeria already operates digital systems capable of providing transparency and traceability in excise operations. Among them are the Nigeria Customs Service’s B’Odogwu Automated Excise Register System (ERS) and the Federal Inland Revenue Service’s e-invoicing platform.
“These home-grown systems give government the real-time visibility that tax stamps promise, without the additional costs and disruptions,” MAN noted.
It warned that layering a tax stamp regime on top of existing systems would only create bottlenecks and escalate compliance costs.
Lessons from Other Countries
MAN highlighted case studies from Kenya, Uganda, Tanzania, and Ghana, where tax stamp systems triggered high compliance costs, legal disputes, and complaints from industries. Despite these burdens, illicit trade persisted.
Even in advanced economies, the model has faced challenges. The United Kingdom recently reformed its stamp-based system after concluding that it was costly, ineffective, and confusing for businesses—an outcome that MAN urged Nigeria to consider before proceeding.
Considering Nigeria’s Fragile Business Climate
The warning from MAN comes against the backdrop of already mounting challenges for Nigerian manufacturers, who face some of the highest operating costs in Africa. The industry has long complained of rising energy prices, high borrowing costs from elevated interest rates, foreign exchange shortages, and multiple taxation at the federal, state, and local levels.
While manufacturers in peer African economies such as Egypt, South Africa, and Morocco are benefiting from lower financing costs and more stable energy supply, Nigerian firms have had to battle power shortages and diesel prices that make production significantly more expensive.
Adding tax stamps to this fragile operating environment, MAN argued, would not only weaken local players in regional competition but could also discourage new investments at a time Nigeria is seeking to attract foreign capital through AfCFTA.
While reiterating its willingness to contribute excise revenues, MAN called on the government to strengthen border controls, boost enforcement, and optimize existing digital platforms rather than adopt tax stamps. It further urged broad consultations with stakeholders and a transparent impact assessment before any final decision is taken.