General News
Nigeria, Other African Nations Eye Sin Taxes, Debt Restructuring to Replace Lost Funding
Cash-strapped African nations are looking at imposing sin taxes, restructuring debt and even trying to take a cut of diaspora remittances to replace lost aid funding and prop up their health systems.
So called sin tax, is an excise tax specifically levied on certain goods deemed harmful to society and individuals, such as alcohol, tobacco, drugs, candy, soft drinks, fast foods, coffee, sugar, gambling, vaping, cannabis and pornography.
According to the Telegraph, ten months after Donald Trump slashed America’s lavish overseas aid, former recipients are scrambling for new ways to fill the gaps, said one of the continent’s leading public health experts.
International health aid is projected to drop by two-fifths in 2025 compared with 2023, according to new World Health Organization figures.
A WHO survey has found cuts have reduced critical services such as maternal care, vaccination and disease surveillance – by up to 70 per cent in some countries.
Nations have acknowledged Mr Trump is not going to change his mind, and similar cuts from the UK and others mean global aid funding is not going to return to levels of recent years.
Prof Helen Rees, a world renowned HIV and global health researcher, said: “We are seeing just a real change in the way that people are thinking about the way we are going to finance.
“Because that is the reality and this is not going to come back to any of those levels that we have seen.”
Prof Rees, who heads the Wits RHI research institute at Johannesburg’s University of the Witwatersrand, said there was also an acknowledgement in many countries that they had become too dependent on aid.
She said: “Many African health ministers have now said we shouldn’t have done this, we shouldn’t have had this level of dependency, so that when it was withdrawn, we all suddenly reeled backwards and said oh my goodness, we hadn’t planned for this.”
African health leaders have also admitted that the previous international largesse had been inefficient and often wasted, doing too little to build up lasting health systems that could stand alone.
Dr Jean Kaseya, director-general of the Africa Centres for Disease Control and Prevention, recently estimated that 60 per cent of traditional foreign health aid to Africa was effectively wasted.
He said: “Let me also shock you: We don’t need more than 40 per cent of [the] money we were receiving before.”
As aid cuts have bitten, Kenya, Nigeria and South Africa have all allocated budget increases to health, and are trying to get the increases approved by their parliaments.
Prof Rees said countries were looking at how they could increase taxation to make up for the lost money.
Some were looking at so-called sin taxes, including targeting a boom in online gambling.
Ghana earlier this year put a 20 per cent increase on taxes for alcohol, tobacco products and sugary drinks, in part to raise money for its health service.
Crypto currency could be another target for taxation, Prof Rees said.
Another area being investigated is money sent from abroad.
She said: “If you imagine some of the big countries that have got a big diaspora, remittances are a hugely important part of the foreign exchange income.
“So is there a way that diaspora remittances can be looked at?”
Countries were also looking at pooling procurement to get better bargaining power on vaccine and drug deals, following an example set by the Pan American Health Organisation, which has had a similar scheme since the 1970s.
As countries fund themselves with more of their own money, they will have to make their own prioritisations about what healthcare they want.
Prof Rees said: “Actually some of these health products that we really need are expensive. Countries are going to have to say, if I buy that vaccine, I can’t buy that drug, or I can put money into health services.”
The financial squeeze is not confined to countries. She said global health agencies such as those run by the United Nations, or bodies such as the Global Fund and the GAVI vaccine alliance were also looking at how to cut costs, pool resources and streamline.
She said: “At every level, people are starting to say it can’t be business as usual and we have to rethink at every single level how we do our business.”
International aid will not disappear, but she said increasingly Washington was doing country-to-country deals, rather than backing big global agencies and programmes.
African nations were also going to have to be better at making the case for support, she suggested.
While there was a clear humanitarian case for health aid, she said there was also a case that it had security and stability benefits for richer countries, including a reduction in migration.
She said: “There’s also a very real case about stabilising poor countries.
“Investment in development and investment in health is a stabiliser for countries. If countries can’t afford to do it adequately themselves, you are going to get destabilisation of economies and therefore of political stability.
“Are countries just going to close borders, or do you say that investment actually builds stability and therefore the need for immigration diminishes? Development aid and stability are incredibly important.”
The WHO this week launched new advice for countries dealing with the aid cuts.
Dr Tedros Adhanom Ghebreyesus, the director general, said: “Sudden and unplanned cuts to aid have hit many countries hard, costing lives and jeopardising hard-won health gains.
According to the African Energy Chamber’s 2025 report, African oil and gas firms face growing “off-field risks,” including regulatory uncertainty, security vulnerabilities, and tighter financial conditions—factors that complicate efforts to raise capital or pursue stock listings.
Nigeria Atomic Energy Commission (NAEC), has said that there are plans for Nigeria to begin to generate electricity from nuclear sources.
Mr Anthony Godwin Ekedegwa, chief executive, NAEC stated this when he recently visited Mr Umar Yusuf Girei, acting managing director, National Inland Waterways Authority (NIWA),in Abuja.
He was at NIWA’s office to solicit the support of NIWA in achieving the numerous advantages of using nuclear energy technology in the country.
According to him, the partnership of critical stakeholders in Nigeria will position the country well in developing and maintaining its nuclear power plant.
The NAEC chief said Nigeria intends to begin the generation of electricity from nuclear sources instead of fossil-based power plants and hydro-based power plants, stressing that for Nigeria to develop, there is a need for the country to diversify its energy needs.
In his remarks, Mr Girei assured NAEC of his agency’s readiness to collaborate on the advancement of a nuclear power plant in Nigeria.
He promised the full support of NAEC for the success of a nuclear power plant in the country, saying that as the organisation saddled with the responsibility of regulating and developing Nigeria Inland Waterways, his entity is strategically positioned to play a critical role in the federal government’s quest for sustainable energy through the new technology.
In a powerful call for continental solidarity, Ralph Mupita, Group CEO of MTN, has asserted that the future of the African continent depends on the dismantling of xenophobic barriers.
Speaking at the Kgalema Motlanthe Foundation (KMF) Winter Seminar, Mupita framed migration as a fundamental characteristic of the African identity, urging South Africa and other nations to embrace integration over exclusion.
He emphasised that the survival of African enterprises depends on a borderless approach to trade and talent. “The digital economy we’re fast moving to knows no borders.” Mupita declared, noting that the mindset of exclusion is an outdated relic that hinders the continent’s ability to compete globally.
He argued that for Africa to leverage the African Continental Free Trade Area (AfCFTA), the psychological barriers of xenophobia must be eradicated.
Providing a stark financial justification for this stance, Mupita highlighted MTN’s own operational reality as a blueprint for Pan-African success. “We earn about 80 to 82% of our earnings from outside South Africa,” he revealed, illustrating that the prosperity of South African-born entities is inextricably linked to their success across the rest of the continent. This figure underscores the interdependence of African economies and the danger of isolationist policies.
Mupita’s stance was strong advocating for unity: “The future of Africa will not be determined by the borders that separate us, but by the economic opportunities that connect us. Governments must set predictable policy and regulations.
Businesses will follow and allocate resources and capital. Together, we can build a continent where opportunity is more evenly shared and prosperity is more widely created.”
Analysts observing the seminar noted that Mupita’s remarks come at a critical juncture where economic volatility often fuels nationalist rhetoric. By tying the fight against xenophobia to the balance sheet, MTN is positioning Pan-Africanism beyond the moral imperative to its function as a business necessity. The CEO stressed that “Migration is part of who we are,” suggesting that the movement of people is the primary engine for the movement of capital and innovation.
Lagos Chamber of Commerce and Industry (LCCI) has urged the Federal Government and the National Pension Commission (PenCom) to suspend the proposed increase in Nigeria’s mandatory pension contribution from 18 per cent to 21 per cent, warning that the policy would raise the cost of doing business, threaten jobs and undermine enterprise sustainability at a time of mounting economic pressures.
Dr. Chinyere Almona, director general of the LCCI, said while strengthening retirement security remains an important policy objective, increasing mandatory pension contributions by three percentage points would impose additional financial burdens on businesses already grappling with high borrowing costs, persistent inflation, foreign exchange volatility, rising energy prices and multiple taxes.
According to the chamber, the proposed increase comes at a period when many businesses, particularly micro, small and medium-sized enterprises (MSMEs), are struggling to remain profitable amid Nigeria’s challenging operating environment.
The LCCI noted that Nigeria’s existing mandatory pension contribution rate of 18 per cent comprising 10 per cent by employers and 8 per cent by employees is already broadly aligned with the Organisation for Economic Co-operation and Development (OECD) average of 18.8 per cent.
It argued that raising the contribution to approximately 21 per cent would place Nigeria above several comparable economies, including the United Kingdom, where mandatory contributions stand at 8 per cent; the United States at 12.4 per cent; Kenya at 12 per cent, subject to earnings caps; and South Africa, where there is no equivalent mandatory private-sector pension contribution.
The chamber warned that implementing the proposed increase would significantly raise employment costs for employers, discourage new recruitment, constrain wage growth and place disproportionate pressure on MSMEs, which account for a substantial share of employment in Nigeria.
According to the LCCI, the higher payroll obligations could also reduce Nigeria’s competitiveness as an investment destination, encourage non-compliance with pension regulations and push more businesses into the informal sector.
“A stronger pension system cannot be built on weaker businesses,” the chamber stated, stressing that economic sustainability and business growth remain critical to expanding pension coverage over the long term.
The LCCI therefore called on the Federal Government to defer the proposal until a comprehensive Nigeria-specific actuarial and economic impact assessment is conducted to determine its implications for businesses, workers and the broader economy.
It also urged policymakers to engage in extensive consultations with organised private sector groups, labour unions and other key stakeholders before implementing any changes to the country’s pension contribution framework.
According to the chamber, the government’s immediate priority should be restoring business confidence, preserving existing jobs, encouraging investment and expanding the formal economy, which it described as the most sustainable pathway to improving retirement savings.
As an alternative to increasing contribution rates, the LCCI advised PenCom to focus on developing more innovative investment instruments capable of generating stronger returns on pension assets.
The chamber said improving investment performance would enhance contributors’ retirement savings without imposing additional financial obligations on employers and employees already facing difficult economic conditions.
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