Starafrica Corporation, which makes Gold Star Sugar and Country Choice foods, is feeling the impact of the sugar tax on drinks, which has cut demand from some of its biggest customers beverage manufacturers such as Delta.
Says Starafrica: “While we reduced prices to be competitive against imports and anticipate realising the benefit in the upcoming year, demand for industrial sugar in general is weak as some of our key customers in the beverage sector suffered from the negative effects of the Added Sugar on Beverages Tax”.
Recently, Delta reported that it paid US$21.1 million in sugar tax last year, with US$14.7M from soft drinks alone.
The tax has made locally made drinks more expensive, opening up the market to cheaper imports.
In 2024, Zimbabwe introduced a sugar tax on sugar-sweetened beverages to generate revenue for cancer treatment and equipment.
The tax, initially set at US$0.002 per gram of sugar, was later reduced to US$0.001 per gram in response to industry concerns.
The revenue generated from this tax is intended to be used for purchasing cancer treatment equipment, modern drugs, and strengthening healthcare infrastructure.
Key aspects of the sugar tax in Zimbabwe:
Tax rate: US$0.001 per gram of sugar in beverages.
Target: Ready-to-drink and cordial beverages.
Revenue allocation: Funds are earmarked for cancer treatment and related equipment procurement.
Industry response: The beverage industry initially protested the tax, leading to a reduction in the rate.
Transparency concerns: There have been calls for transparency and accountability in the management and use of the sugar tax revenue, particularly regarding its allocation to cancer treatment.
Impact and implications:
The sugar tax is part of Zimbabwe’s broader strategy to address non-communicable diseases and improve healthcare outcomes.
It is seen as a way to discourage the consumption of sugary drinks and promote healthier lifestyles.
The success of the tax depends on effective implementation, transparency, and accountability in revenue management.
There are concerns about the potential impact on beverage prices and affordability.
Some stakeholders have called for clearer guidelines on how the revenue is being utilized, including specifying which hospitals and facilities are benefiting from the funding.
Zwnews
