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Nigeria 2023 Elections: The hunt for unencumbered revenues



Transforming Nigeria Post-2023: Tackling the Revenue Crisis Head-On







Transforming Nigeria Post-2023: Tackling the Revenue Crisis Head-On

Nigeria Fiscal Reform 2023
Visualizing Nigeria’s shift in fiscal policy and revenue strategy since 2023.

Table of Contents

The Fiscal Deficit Problem

In 2023, Nigeria’s fiscal deficit stood at 5.4% of GDP, largely funded by debt. Revenue collection remained under 11% of GDP, while debt servicing took up 80% of it. Recent reforms have aimed to correct this imbalance.

Election Promises

Presidential candidates promised sweeping changes: Tinubu vowed to remove fuel subsidies and unify exchange rates, Obi called for zero-based budgeting, and Atiku pushed for privatization and investment-led reforms.

Key Reforms After 2023

  • Increased VAT from 7.5% to 12.5%.
  • Created a centralized National Revenue Service (NRS).
  • Incentives introduced for upstream oil investments.

These reforms improved revenues and helped narrow the deficit to under 3% by mid-2025. See more in the future outlook.

Fuel Subsidy Removal

The end of fuel subsidies in mid-2023 saved Nigeria $7.5 billion annually. However, inflation spiked to over 24%, and living costs soared. For broader context, visit this subsidy reform summary.

Expert Recommendations

Experts recommend merging tax agencies under NRS, expanding digital VAT tracking, and enhancing social safety nets. These steps could increase tax-to-GDP to 18% by 2027.

Challenges Ahead

Implementation hurdles include political resistance, public protests, and weak state capacity. Despite rising revenues, inflation and hunger remain pressing concerns. See subsidy impact for more.

Looking to 2027

Nigeria’s 2027 elections may hinge on whether reforms succeed. If fiscal discipline continues and public trust improves, the country may finally overcome its dependency on oil and subsidies.

Conclusion

Transforming Nigeria’s public finances requires more than just political promises. Structural reforms, transparency, and resilience will determine whether the post-2023 agenda leads to long-term success.

Sources





Revolutionizing Nigeria Post-2023: Solving the Massive Revenue Crisis



Revolutionizing Nigeria Post-2023: Solving the Massive Revenue Crisis

Nigeria Revenue Reform 2023–25
Visualizing Nigeria’s major fiscal shifts in VAT, subsidy reform, and FX policy since 2023.

Table of Contents

The Fiscal Deficit Problem

In 2023, Nigeria’s public finance was under stress. The fiscal deficit stood at about 5.4% of GDP, while government revenue lingered below 11% of GDP. These figures placed intense pressure on public service delivery, as debt servicing absorbed ~80% of revenue :contentReference[oaicite:1]{index=1}.

Election Promises

During the 2023 campaign, leading candidates offered varied fiscal remedies:

  • Tinubu (APC): Fuel subsidy removal, VAT hikes, unified FX regime, and anti-leak tax enforcement.
  • Obi (LP): Zero-based budgeting, centralized tax system, and expanded healthcare allocations.
  • Atiku (PDP): Privatization and reduced corporate taxes to spur investment.

However, none mapped out spending plans, timelines, or political buy-in :contentReference[oaicite:2]{index=2}.

Key Reforms Achieved

Post-election, the government passed several major reforms:

  • Raised VAT from 7.5% to 12.5% (May 2025) :contentReference[oaicite:3]{index=3}.
  • Created a centralized National Revenue Service (NRS) to consolidate tax agencies :contentReference[oaicite:4]{index=4}.
  • Deployed incentives for upstream oil sector efficiency :contentReference[oaicite:5]{index=5}.

By mid-2025, these measures helped bring the fiscal deficit down to ~3% of GDP :contentReference[oaicite:6]{index=6}.

Fuel Subsidy Removal

The 2023 subsidy removal saved approximately $7.5 billion annually (~2% of GDP), but sparked significant inflation and cost-of-living pressure :contentReference[oaicite:7]{index=7}.

Reduced petrol imports and fuel theft contributed to a balance of payments surplus in 2024 (~$6.8 billion) :contentReference[oaicite:8]{index=8}. A CNG conversion initiative has also been launched to reduce transport costs :contentReference[oaicite:9]{index=9}.

External Pressures & IMF Advice

Oil prices have hovered below the 2025 budget benchmark (~$68/barrel vs. $75) :contentReference[oaicite:10]{index=10}. The IMF recommends building economic buffers through subsidy cuts and expanding cash transfers to protect the vulnerable :contentReference[oaicite:11]{index=11}.

Expert Reform Roadmap

The consensus among economists includes:

  1. Strengthen the NRS, raise tax-to-GDP to 15–18% :contentReference[oaicite:12]{index=12}.
  2. Adopt zero-based budgeting and enforce digital tax systems :contentReference[oaicite:13]{index=13}.
  3. Expand safety nets and ensure FAAC allocations fund health, education, and agriculture :contentReference[oaicite:14]{index=14}.

Challenges Ahead

  • State resistance: States fear loss of VAT share from VAT-centralization.
  • Public pressure: Inflation and cost spikes have led to protests and strikes :contentReference[oaicite:15]{index=15}.
  • Governance gaps: Implementation delays and capacity challenges persist :contentReference[oaicite:16]{index=16}.

Looking to 2027

The sustainability of these reforms hinges on:

  • Legalizing the NRS and VAT sharing bill by late 2025.
  • Building digital tax systems and expanding VAT revenue.
  • Restoring social spending and building credibility through transparent execution.

Conclusion

The post-2023 period marked a pivot in Nigeria’s fiscal policy—from rhetoric to real structural reforms. VAT hikes, subsidy elimination, and NRS creation are significant steps. But success depends on governance, political will, and equitable distribution. If executed well, Nigeria could emerge fiscally stronger by 2027. If not, today’s “shock therapy” may simply leave chronic pain behind :contentReference[oaicite:17]{index=17}.

Sources





Revolutionizing Nigeria Post‑2023: Solving the Massive Revenue Crisis



Revolutionizing Nigeria Post‑2023: Solving the Massive Revenue Crisis

Nigeria Revenue Reform 2023–25
Fiscal reforms in VAT, subsidy, and FX policy since 2023.

Table of Contents

The Fiscal Deficit

In 2023, Nigeria’s fiscal deficit reached 5.4% of GDP, with government revenue under 11%. Debt servicing absorbed about 80% of revenue :contentReference[oaicite:6]{index=6}.

Election Promises

Campaign pledges included fuel subsidy removal, VAT hikes, and FX reforms. None mapped out execution or timelines :contentReference[oaicite:7]{index=7}.

Reforms Achieved

  • VAT raised from 7.5% to 12.5% in May 2025 :contentReference[oaicite:8]{index=8}.
  • National Revenue Service (NRS) created, consolidating over 100 tax bodies :contentReference[oaicite:9]{index=9}.
  • Oil-sector incentives introduced for efficiency :contentReference[oaicite:10]{index=10}.

Result: deficit fell to ~3% of GDP by mid‑2025 :contentReference[oaicite:11]{index=11}.

Fuel Subsidy

Subsidy removal saved ~$7.5 billion annually (~2% of GDP), but inflation jumped to ~24% :contentReference[oaicite:12]{index=12}.

Balance of payments surplus (~$6.8 billion) and a CNG rollout followed for transport sectors :contentReference[oaicite:13]{index=13}.

IMF Recommendations

With oil prices below budgeted $75/barrel, the IMF advises building buffers and expanding cash transfers for the poor :contentReference[oaicite:14]{index=14}.

Expert Reform Roadmap

  1. Strengthen NRS, target 15–18% tax‑to‑GDP :contentReference[oaicite:15]{index=15}.
  2. Implement zero‑based budgeting and digital tax systems :contentReference[oaicite:16]{index=16}.
  3. Increase FAAC allocations for social sectors :contentReference[oaicite:17]{index=17}.

Challenges Ahead

  • State governments worry about losing VAT income :contentReference[oaicite:18]{index=18}.
  • Inflation-related protests and strikes remain a risk :contentReference[oaicite:19]{index=19}.
  • Implementation delays and governance gaps persist :contentReference[oaicite:20]{index=20}.

Looking to 2027

Success depends on NRS legalisation, VAT-sharing structures, and digital tax enforcement by 2026.

Conclusion

Nigeria is undergoing a “shock therapy” of fiscal reforms: VAT hikes, subsidy removal, NRS creation. But resilience depends on governance, equity, and transparent distribution. Done right, post‑2023 reforms could secure long-term stability by 2027 :contentReference[oaicite:21]{index=21}.

Sources





Revolutionizing Nigeria Post‑2023: Solving the Massive Revenue Crisis



Revolutionizing Nigeria Post‑2023: Solving the Massive Revenue Crisis

Nigeria Revenue Reform 2023–25
Fiscal reforms in VAT, subsidy, and FX policy since 2023.

Table of Contents

The Fiscal Deficit

In 2023, Nigeria’s fiscal deficit reached 5.4% of GDP, with government revenue under 11%. Debt servicing absorbed about 80% of revenue, before reforms helped reduce deficits to ~3% by 2024 :contentReference[oaicite:15]{index=15}.

Election Promises

Candidates pledged reforms—fuel subsidy removal, VAT hikes, FX unification, and zero-based budgeting—but none included execution plans or timelines.

Reforms Achieved

  • VAT slated to rise to 12.5% by 2026 with exemptions :contentReference[oaicite:16]{index=16}.
  • National Revenue Service (NRS) introduced to consolidate tax agencies.
  • Oil-sector fiscal incentives aimed at reducing theft.

These contributed to lowering the deficit to ~3% by mid-2025 :contentReference[oaicite:17]{index=17}.

Fuel Subsidy

Subsidy removal saved ~$7.5 billion annually (~2% of GDP), but inflation spiked to ~24% :contentReference[oaicite:18]{index=18}.

The country also saw a balance-of-payments surplus (~$6.8 billion) and a rollout of CNG-powered vehicles :contentReference[oaicite:19]{index=19}.

IMF Recommendations

With oil prices below the $75 budget benchmark, the IMF urged buffers, subsidy cuts, and expanded cash transfers :contentReference[oaicite:20]{index=20}.

Expert Reform Roadmap

  1. Strengthen NRS and aim for a tax-to-GDP of 15–18% :contentReference[oaicite:21]{index=21}.
  2. Adopt zero-based budgeting and digital tax systems.
  3. Channel FAAC savings toward health, education, and agriculture.

Challenges Ahead

  • State governments resist losing VAT share :contentReference[oaicite:22]{index=22}.
  • Protests and strikes may grow due to inflation and VAT hikes.
  • Institutional capacity gaps could slow implementation.

Looking to 2027

Key tasks before 2027: legalize the NRS, finalize VAT-sharing frameworks, digitize tax compliance, and restore public-sector investment.

Conclusion

Nigeria is undergoing fiscal “shock therapy”—VAT increases, subsidy removals, NRS introduction. Success hinges on governance, equity, and transparency. Done right, post-2023 reforms could yield long-term gains by 2027. Otherwise, the temporary relief may foster lasting strain :contentReference[oaicite:23]{index=23}.

Sources





Revolutionizing Nigeria Post‑2023: Solving the Massive Revenue Crisis



Revolutionizing Nigeria Post‑2023: Solving the Massive Revenue Crisis

Nigeria Revenue Reform 2023–25
Fiscal reforms in VAT, subsidy, and FX policy since 2023.

Table of Contents

The Fiscal Deficit

In 2023, Nigeria’s fiscal deficit reached approximately 5.4% of GDP. Thanks to subsidy cuts and tax improvements, it narrowed to ~3% in 2024—though it’s projected to rise to ~4.7% in 2025 :contentReference[oaicite:14]{index=14}.

Election Promises

Candidates pledged subsidy withdrawal, VAT hikes, FX unification, and zero-based budgeting—but rarely included detailed implementation plans.

Reforms Achieved

  • VAT increased to 12.5% (May 2025) :contentReference[oaicite:15]{index=15}.
  • National Revenue Service (NRS) created to consolidate tax agencies :contentReference[oaicite:16]{index=16}.
  • Oil-sector incentives implemented to curb revenue loss :contentReference[oaicite:17]{index=17}.

These reforms contributed to the deficit’s reduction in 2024 :contentReference[oaicite:18]{index=18}.

Fuel Subsidy

Subsidy removal saved roughly $7.5 billion annually (~2% of GDP), but inflation surged to 24–30% :contentReference[oaicite:19]{index=19}.

CNG Initiative

The government launched a CNG program—over 100,000 vehicles converted so far, aiming for 1 million by 2027—to reduce transport costs by ~40% :contentReference[oaicite:20]{index=20}.

IMF Recommendations

With oil prices below the $75 budget benchmark, the IMF recommends building buffers and expanding cash transfers to protect the vulnerable :contentReference[oaicite:21]{index=21}.

Expert Roadmap

  1. Strengthen NRS to reach 15–18% tax-to-GDP :contentReference[oaicite:22]{index=22}.
  2. Adopt zero-based budgeting and digital tax systems.
  3. Direct FAAC surplus to health, education, and agriculture.

Challenges Ahead

  • State resistance to VAT-sharing changes.
  • Social unrest risks amid inflation and subsidy cuts :contentReference[oaicite:23]{index=23}.
  • Weak institutional capacity may slow implementation.

Looking to 2027

To sustain gains, legalize NRS, finalize VAT mechanisms, advance tax digitalization, and restore public investment.

Conclusion

Nigeria’s fiscal “shock therapy” has yielded major reforms. Success will depend on governance, fairness, and public trust. If executed well, post‑2023 reforms could stabilize the economy before 2027.

Sources





Revolutionizing Nigeria Post‑2023: Solving the Massive Revenue Crisis



Revolutionizing Nigeria Post‑2023: Solving the Massive Revenue Crisis

Nigeria Revenue Reform 2023–2025
Fiscal reforms in VAT, fuel subsidy, and FX policy since 2023.

Table of Contents

The Fiscal Deficit

In 2023, Nigeria’s fiscal deficit stood at around 5.4% of GDP. Thanks to major reforms—including the removal of petrol subsidies and improvements in tax administration—the deficit fell to approximately 3% in 2024. However, projections from the IMF indicate it may rise again to 4.7% in 2025 due to ongoing capital needs.

Election Promises

During the 2023 elections, all major candidates promised bold reforms: subsidy removal, VAT hikes, FX unification, and zero-based budgeting. However, few provided concrete execution plans or transition timelines, leaving policy uncertainty until mid-2023.

Reforms Achieved

  • In May 2025, the government increased VAT to 12.5%, while expanding exemptions on food and education services.
  • The National Revenue Service (NRS) was created to unify federal and state tax administration, increasing efficiency.
  • Oil-sector fiscal reforms included new metering systems and tightened monitoring to curb theft and boost revenues.

These reforms contributed to higher non-oil revenues and reduced fiscal pressure by Q2 2025.

Fuel Subsidy Removal

The fuel subsidy was eliminated in mid-2023, generating annual savings of $7.5 billion—about 2% of GDP. However, this came at a cost: inflation rose to 24–30%, driven by rising transport and food costs.

CNG Initiative

To mitigate inflationary impacts, Nigeria launched a compressed natural gas (CNG) program. By mid-2025, over 100,000 vehicles had been converted, with a target of 1 million by 2027. This aims to cut transport costs by up to 40% and reduce dependence on petrol.

IMF Recommendations

The IMF has praised Nigeria’s reform efforts but warned of vulnerabilities due to oil price volatility. It recommends further consolidation, including expanded cash transfer programs and sustained investments in revenue administration.

Expert Roadmap

  1. Empower the NRS to increase the tax-to-GDP ratio to 15–18%.
  2. Adopt zero-based budgeting across federal ministries and states.
  3. Digitize all revenue collection and implement automated VAT compliance.
  4. Redirect FAAC surplus to healthcare, education, and agriculture.

Challenges Ahead

  • State-level resistance to VAT redistribution threatens harmonization.
  • Labor unions have threatened strikes over rising living costs.
  • Weak institutional capacity may delay reform execution.

Looking to 2027

To consolidate gains, Nigeria must legalize the NRS, complete VAT harmonization, expand CNG coverage, and invest in public infrastructure. The next two years are critical to sustaining reform momentum and avoiding policy reversals.

Conclusion

Nigeria’s post‑2023 fiscal path is a form of shock therapy: subsidy withdrawal, VAT reform, FX liberalization, and new tax institutions. If implemented equitably and transparently, these reforms can lead to sustained fiscal stability by 2027. Failure to do so may deepen inequality and public distrust.

Sources

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