Economy
Nigeria’s Tax Revenue to GDP Ratio Rises to 7%
By Modupe Gbadeyanka
For a while, the tax revenue to Gross Domestic Product (GDP) ratio of Nigeria had been at a paltry 6 percent, but this figure has risen now to 7 percent.
Minister of Finance, Mrs Zainab Ahmed, while speaking on Wednesday at a function in Abuja, disclosed that the tax to GDP ratio of Africa’s largest economy was presently at 7 percent.
However, she said this figure was still low, challenging revenue generation agencies in the country to brace up and broaden the non-revenue base of government.
Mrs Ahmed, who spoke at the unveiling of federal government’s Strategic Revenue Growth Initiatives (SRGI) for sustainable revenue generation in all sectors of the economy, noted that government plans to achieve “sustainability revenue generation to optimally collect revenues, so we always maintain fiscal buoyancy and resilience.”
She said thereafter, government will identify new revenue streams and enhance the enforcement with regards to revenue collection on our existing revenue streams.
According, when the above is achieved, another move would be to create a “cohesion between revenue generating entities and equipping them with cutting-edge tools and expertise needed to support high performance, so we can turnaround our current performance on revenue outturn to meet revenue targets that we are charged with.”
“The revenue initiatives have been broken into clear implementable portfolios for each relevant MDA and I believe that these are well thought out initiatives targeted at improving our tax base and collections, ensuring we have big data to work with, deploy a single trade platform, among many others,” Mrs Ahmed said.
She further that, “We have faced difficulty in mobilising domestic funds necessary for human capital development and infrastructure that are both drivers of sustainable economic growth.
“Our current revenue to GDP ratio of about seven percent is unsatisfactory and we are keen on exerting all efforts in turning this around.
“The case remains the same with our current contribution between oil and non-oil revenues to oil and non-oil GDP, for which our analysis on oil revenue to oil GDP reveals as 39 percent while non-oil revenue to non-oil GDP as 4.2 percent.
“Our VAT revenue to GDP in Nigeria for example stands at 0.8 percent, which compares unfavourably to the ECOWAS average of 3.4 percent. So also, is our excise revenue which is 4.1 percent, compared to Ghana at 15 percent or Kenya at 19.5 percent.”
Last year, Executive Secretary of the Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, had said his agency would make efforts to increase the national tax revenue to GDP ratio to at least 20 percent by December 31, 2018.
However, with the latest information by his boss, the Finance Minister, this target was never met by the tax agency.
“Revenue authorities nationwide should ensure that all efforts are made to increase the national tax revenue to the Gross Domestic Product ratio to at least 20 percent by December 31, 2018,” FIRS had said in a communiqué issued last September.
Business Post reports that some Nigerians still find it difficult to pay tax to government because of issue of transparency on the part of government. Citizens provide virtually every basic things for themselves, including water, electricity, shelter, food, sometimes roads and others.
Though the number of people in the tax net is increasing by the day, a lot of taxpayers still have to be captured by government. At the moment, the tax base is nearly 20 million in a population of nearly 200 million.
By Aduragbemi Omiyale
New independent research has revealed that the parent company of Facebook, WhatsApp, and Instagram, Meta, contributes about $820 million to the Nigerian economy every year.
In the new report titled Nigeria’s Digital Economy, conducted by Public First, it was discovered that about 14 million Nigerian small and medium enterprises (SMEs) used Meta’s apps like Facebook, Instagram, WhatsApp, Messenger, Meta AI, and Threads, to start and grow their businesses in 2025, contributing $2 billion to the country’s gross domestic product (GDP) and delivering an estimated $640 million in productivity gains through more efficient instant messaging.
Business Post gathered from the study released in Abuja on Thursday that the adoption of artificial intelligence (AI) is set to add about $22 billion to Nigeria’s DGP by 2035.
It was observed that virtually all Nigerian businesses surveyed confessed that Meta’s platforms have expanded their customer reach, with the company’s platforms functioning as essential digital infrastructure connecting Nigerian entrepreneurs to customers, markets, and new economic opportunities.
WhatsApp is Nigeria’s gateway to AI
WhatsApp is playing a central role in connecting Nigerians to AI and new economic opportunities across the region. The platform serves as Nigerians’ primary AI surface — reflecting the wider regional pattern where 93 per cent of Meta AI prompts in Sub-Saharan Africa are made via WhatsApp — demonstrating how AI adoption in Nigeria is happening through the tools people already use every day.
“Nigeria is one of the most dynamic, entrepreneurial and digitally engaged markets in the world — and this research makes clear the scale of what is possible when Nigerian ambition meets the right digital tools.
“From a tailor in Lagos reaching customers across the country through Instagram, to a small business owner in Kano taking orders on WhatsApp, to a creator in Abuja building a global audience on Facebook — Meta’s platforms are removing the traditional barriers to growth and unlocking real economic opportunity,” the Director of Public Policy for Sub-Saharan Africa at Meta, Balkissa Ide Siddo, said.
The fact that 80 per cent of Nigerians say access to reliable internet has improved compared to a decade ago speaks to the progress already made, and with continued investment in connectivity, smart policy that supports innovation, and the rise of open-source AI built for and by Africans, Nigeria is exceptionally well positioned to lead the continent’s next decade of digital growth. We are proud to be a long-term partner in that journey,” Ide Siddo added.
AI and Nigeria’s next growth frontier
The research highlights the transformative potential of artificial intelligence for Nigeria’s economy and innovation ecosystem.
SMEs are reaching new customers across Nigeria
For Nigerian small businesses, Meta’s platforms have become a primary sales and discovery channel. 81 per cent of online businesses surveyed said Facebook, Instagram, and WhatsApp have expanded their customer base beyond their local geography — reducing customer acquisition costs and giving a business in Kano access to the same advertising and commerce tools available to businesses in Lagos, London or New York.
“Nigeria’s digital transformation is creating new opportunities for businesses, creators and consumers alike. The findings show that Meta’s platforms are helping Nigerian firms grow across formal and informal sectors, supporting entrepreneurship and strengthening participation in one of the world’s most rapidly expanding digital economies.
“With the right combination of infrastructure, platform access and open-source AI, the upside for Nigeria is significant,” a Director at Public First, Alison Neyle, stated.
By Adedapo Adesanya
Nigerian energy giant, Oando Plc, says it is reporting rising revenues as global crude buyers increasingly turn away from the volatile Middle East in search of safer supply sources.
According to the chief executive of Oando, Mr Wale Tinubu, the crisis around the Strait of Hormuz has damaged the Gulf region’s long-standing reputation as the world’s safest and most reliable oil-producing hub, leading to demand elsewhere.
Speaking in a recent interview on the sidelines of the Africa CEO Forum in Kigali, Rwanda, Mr Tinubu disclosed that Oando is already benefiting financially from the geopolitical tensions.
“We are certainly getting a windfall increase in our revenues,” Mr Tinubu said.
According to him, mounting security concerns around the Strait of Hormuz have forced buyers to reconsider their dependence on Middle Eastern crude. The waterway accounts for around 20 per cent of global crude and liquified natural gas (LNG) flows, mostly to Asian markets.
“The Middle Eastern premium you got from being a stable environment to produce hydrocarbons has been shattered,” he added.
The conflict is rapidly reshaping global energy trade flows, with African producers, particularly Nigeria, emerging as alternative suppliers at a time of heightened uncertainty in the Gulf.
Indonesia recently took in some Nigeria crude to cushion against the impact that disruptions are having on fuel supplies.
Mr Tinubu said Oando is rolling out a seven-well drilling campaign aiming to add 10,000 barrels per day by the end of the year.
Oando is also looking to raise up to $750 million to execute a 100-well onshore drilling campaign, aiming to triple its oil and gas output from 32,000 barrels of oil equivalent per day to nearly 100,000 barrels of oil equivalent per day.
According to Mr Tinubu, global supply shocks have created highly favourable conditions for securing financing and expanding operations to meet supply gaps.
By Adedapo Adesanya
Nigerian billionaire investor, Mr Femi Otedola, has announced plans to invest $100 million in the Dangote Refinery, which plans to list later this year.
Mr Otedola disclosed this on Wednesday after leading a delegation of top executives from First HoldCo on a visit to the Dangote refinery.
“On a personal note, I’ve appealed to him (Aliko Dangote). I’ve been here with him 25 times, so my compensation is he’s going to allocate to me shares worth $100 million in the private placement,” the billionaire said.
Mr Otedola had previously denied that he had any stake or funded the construction of a 650,000 barrels per day facility.
The announcement marks his next big move after increasing his stake in First Holdco as well as buying a $10 million property in London.
Mr Dangote last year said the refinery could sell up to 10 per cent stake in the listing, which is valued at about $5 billion. It is aiming for a valuation of up to $50 billion for Dangote refinery.
The billionaire is planning to make the IPO a cross-border listing to enable the refinery to draw investments from domestic and international investors.
Mr Dangote, this week, said the IPO is designed to democratise wealth creation and give Africans direct access to participate in the continent’s industrial transformation.
On his part, Mr Dangote, president of the Dangote Group, says the company is targeting a private placement of about $2 billion for the refinery.
While the actual date for the IPO is yet to be announced, Mr Otedola’s early investment indicates value and could spur other high-net-worth individuals to show interest.
Mr Otedola, an ally of Mr Dangote, led top executives of First HoldCo on a tour of the refinery and the fertiliser plants in the Lekki free trade zone area.
The team also visited key project sites such as the jetty, a facility built by Dangote industries to receive large vessels.
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