A 10 percent green tax on single-use plastics, introduced by outgoing President Muhammadu Buhari in May 2023 as a part of his swan song from office was suspended by incoming President Tinubu in July 2023 almost as swiftly as it was introduced.
The suspension was received with distress by environmental groups. We too were initially disappointed by the government’s policy reversal and the explanation behind the decision: to protect business growth. Representing the interests of an emerging recovery and recycling sector in Lagos, this explanation seemed double-handed, as green taxes are a key tool to support the growth of the recycling industry.
However, when it comes to waste management policy, the track record of the Federal Government has been mixed. On the one hand, the government has been both receptive and progressive when it comes to embracing policy approaches that intend to reduce waste generation and improve collection and recycling rates. On the other hand, the enthusiasm to meet these goals is not always matched with the administrative grit to drive policy forward in a meaningful way.
An example is Extended Producer Responsibility (EPR). EPR is a regulation that requires producers of plastic packaging to pay for collection and recycling infrastructure, often through industry-run Producer Responsibility Organizations (PRO). EPR guidelines were introduced by the Nigerian Environmental Standards and Regulatory Enforcement Agency (NESREA) in 2014.
This immediately led well-known brands including Coca-Cola, Nigerian Breweries and Unilever to set up a PRO, called the Food and Beverage Recycling Association (FBRA). However, to this day the plastics EPR regime in Nigeria does not have statutory characteristics, so of more than 1000 plastic producers in Nigeria, only 31 companies have registered with and pay into FBRA.
This is devastating for the environment as the fewer contributors to FBRA, the less resources are available to invest in collection and recycling capacity. The fact that the guidelines are not enforced across all plastics companies also acts as a deterrent for deeper private sector investment into recycling.
The Federal Plastics Management Policy, which was published in 2020, is another example where the government introduced an ambitious agenda to address the monumental challenge of plastic waste in Nigeria. The policy has set targets to eliminate single-use plastic bags and Styrofoam by 2028 and to ensure that all plastic packaging in the market is recyclable or biodegradable by 2030.
We are extremely supportive of these goals; however, we are not aware of steps the government has taken to assure that regulators and the market are ready to meet targets, leading us to wonder how these objectives can be constructively met on time.
The green tax follows similar patterns to its predecessors. We believe it is laudable and necessary to use fiscal policy to incentivize investment into recycling and alternative packaging materials. However, the speed at which the green tax was introduced and the lack of public information about the types of plastic that are subject to taxation indicate that the necessary footwork to determine the impact of the tax on vulnerable communities, the types of alternatives available to manufacturers and retailers, and the allocation of tax revenues had not been fully carried out at the time the tax was introduced.
In this respect, we are aligned with the view of the Federal Government that the green tax as it was introduced could be potentially damaging for the waste management sector and the economy more broadly. Nevertheless, we believe firmly that waste management policy should not be trashed. In other words, it is critical that the green tax is treated as a suspension, not a cancellation. Likewise, both the EPR and the Plastics Management policy deserve to be nurtured, rather than dismissed.
While existing policy infrastructure may not be fully developed, it has stimulated a dynamic waste management and recycling sector that has technical expertise, deep local knowledge and high levels of industry and civil society organization.
These organizations should be treated as allies that can support the government to do the heavy lifting when it comes to the technical review and administration of standards. For example, industry organizations such as FBRA have developed robust governance and accounting processes that determine member contributions and allocation of those contributions. This is an asset which can and should be leveraged by the government to strengthen existing policy.
In suspending the green tax, the message of the current administration is that the development of market-friendly policies is of greatest priority. Plastics management policies, if designed and implemented properly, can stimulate both local business and innovation and serve to develop the economy.
We call on the new administration to recognize this; rather than throwing existing policy away, setting up a working group composed of public, private and civil society organizations to support technical review, harmonization and implementation of standards would be the first step to building an institutional framework that can benefit both markets and society.
We are confident that the new administration will work pragmatically and creatively with its counterparts in the civil society and the private sector to design and deliver regulation that works for everyone.
Dr. Idowu-Adegoke is president, Lagos Recyclers Association and Dr. Beinisch, is with the Circular Economy Innovation Partnership