Non-Oil Sector Drives Nigeria’s Tax Revenue to N17.4trn in Seven Months, Hits Record Growth

Nigeria’s diversification efforts are yielding results as the non-oil sector powered tax revenues to N17.4 trillion between January and July 2025, marking a historic performance for the country’s fiscal system. According to official data, non-oil taxes contributed N13.07 trillion, representing 75 percent of total collections, while oil taxes accounted for N4.25 trillion. The figure surpasses Nigeria’s combined tax earnings for 2021 and 2022, positioning 2025 as the nation’s strongest year for revenue growth.

The rise in collections reflects the impact of reforms, improved compliance, and a shift away from heavy reliance on crude oil. The Federal Inland Revenue Service (FIRS) attributed the surge to enhanced enforcement measures and diversification strategies. Analysts also pointed to the boost from the higher value-added tax (VAT) rate introduced in 2019, along with new levies such as the Nigeria Police Trust Fund levy, NASENI levy, and the Electronic Money Transfer Levy. These measures have broadened the tax base significantly.

Experts say the non-oil sector’s performance is a bright spot for Nigeria’s economy, especially as oil price volatilitycontinues to weigh on government earnings. Oil prices averaged $70 per barrel in 2025, lower than budgetary projections, underscoring the importance of tax revenues in cushioning fiscal risks. “A substantial share of Nigeria’s federation revenue now comes from non-oil sources, and this trend is set to continue,” said Samuel Oyekanmi, Research Lead at Norrenberger Financial Group.

Beyond fiscal stability, higher tax revenues could narrow the budget deficit, which the IMF projects at 4.7 percent of GDP this year due to weaker oil income. Analysts believe improved revenues may ease debt servicing pressure, which currently consumes about half of government earnings, and create room for capital investment. “Consistency and reform momentum are critical for sustainability,” noted Samuel Sule, CEO of Renaissance Capital Africa.

Looking ahead, the government’s new Tax Act set to take effect in January 2026 is expected to strengthen non-oil revenue further. The law seeks to raise Nigeria’s tax-to-GDP ratio from 13 percent to 18 percent by 2030 by taxing high-income earners more, plugging leakages, and simplifying compliance for small businesses and low-income earners. Analysts say the Act will be a key driver of long-term fiscal resilience as Nigeria continues its journey away from oil dependency.

Source: Business Day