April 6, 2021

Illicit Tobacco Trade in Nigeria

In this study, we document successful cases of effective synergies in countries that, like Nigeria, display a significant presence of the tobacco industry and face similar challenges to trade regulation but were still able to implement higher tobacco tax policies and other tobacco control measures, while reducing the level of illicit trade. The key lesson is that measures to reduce illicit tobacco trade needs to be amalgamated with tobacco taxation, and each can be addressed in its own respect with appropriate strategies. Moreover, Nigeria has not reached the phase where tobacco tax should be a concern for the tobacco industry. With the new tax policy introduced in 2018, this amounts to 16.4 percent excise tax burden in overall, which is still significantly lower than the 75 percent excise tax burden on tobacco products recommended by the WHO. Our analysis of price trends in Nigeria and differential with neighbouring countries show that there has not been significant perturbation in the Nigerian tobacco market to create an arbitrage opportunity.

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