Nigeria is undergoing a major fiscal transformation as tax revenues now account for an unprecedented 87% of total federation earnings, signaling a decisive move away from decades-long reliance on crude oil. According to a new report by Quartus Economics, the country’s dependence on oil revenues, which once contributed about three-quarters of total earnings, has sharply declined to roughly 25% in recent years.
This shift is largely attributed to a surge in tax collection, particularly from the non-oil sector. Between 2023 and 2025, Nigeria generated ₦62.3 trillion in tax revenue, with non-oil taxes contributing ₦45.48 trillion. Over three years, tax revenue nearly tripled from ₦10.18 trillion in 2022 to ₦28.29 trillion in 2025, highlighting improved revenue mobilisation and administrative reforms that have strengthened the country’s fiscal resilience.
The change comes after years of vulnerability to global oil price shocks. During the 2014 oil price crash, Nigeria’s crude earnings plunged by more than 60%, triggering a fiscal crisis that saw total revenues fall by 20% between 2015 and 2019. This downturn coincided with declining GDP growth, which slowed from an average of 6.1% between 2010 and 2014 to 1.2% in the subsequent years, and a sharp drop in per capita income from over $4,000 to around $1,120 by 2024.
Despite these challenges, total federation revenue has nearly quadrupled since 2019, while tax collections are now more than five times pre-pandemic levels. Non-tax revenues, which once made up over half of government earnings, have declined to 12.9%, reinforcing the dominance of taxes as the primary funding source for government operations. Analysts note that while rising public debt—especially external debt at nearly 48.6% of total obligations—remains a concern, the tax-driven model offers a more stable and predictable revenue base.
Looking forward, sustaining these gains will require disciplined fiscal management, strategic deployment of borrowed funds, and continued efforts to broaden the country’s productive base. While Nigeria has reduced its exposure to oil price fluctuations on the revenue side, dependence on crude exports for foreign exchange persists, highlighting the need for structural reforms to secure long-term economic stability.
source: The dailytime