• Non-oil tax jumps by 44% to N10.64 trillion
• FG walks tightrope to budget target despite improvement
• Experts demand accountability
Efforts to improve Nigeria’s fiscal position and reduce the concentration risk of oil sale dependence may be getting promising traction as the government grew its composite tax revenue by 43 per cent in the first half (H1) of the year.
The progress report document sighted by The Guardian shows the government posted a total revenue inflow of N14.27 trillion from January to June, 43 per cent above N9.98 trillion collected in last year’s comparative period.
The amount is about 27 percentage points higher than the 16.4 per cent baseline growth target and 57 per cent of the original targeted revenue for the year, the document stated.
Oil tax revenue, the document said, was 39.4 per cent up compared to N2.6 trillion realised H1 2024. Non-oil tax, which accounted for about three-fourths of the collections, rose by 44.2 per cent to N10.64 trillion.
In H1, 2024, the country realised N7.37 trillion from non-oil tax. The government has insisted that growing its non-oil revenue is key to mobilising revenue for sustainable public sector funding.
If the government sustains the H1 trend, it could close the year at an annualised tax revenue of N28.54 trillion, which would translate to 7.7 per cent of the gross domestic product (GDP).
The National Bureau of Statistics (NBS) estimated the rebased 2024 nominal national output at N372.82 trillion.
Despite the improvement, it is still a long walk to raise the federal government’s equity contribution to this year’s N55 trillion budget and keep the deficit around the N14 trillion estimate.
The government is looking at total revenue of N40.89 trillion, with N29.87 trillion expected to come from its share from the Federation Account Allocation Committee (FAAC) while unclassified “other” and independent revenue sources are expected to make up the remaining N6.02 trillion.
The critical tax reforms that are expected to bolster public revenue and block leakages in collection processes will not be implemented until next year. Besides, the government has missed the opportunity to lay the legal framework for accelerated expansion of the value-added tax (VAT), a major component of the non-oil revenue.
In the meantime, oil production, at 1.62 million barrels per day (bpd) as at the first quarter, remains far below the budget target. So also, is the benchmark price, which was set at $75 per barrel.
With rising uncertainty at the global market, the government only hopes oil prices do not trade far below $70 going into the second half of the year.
Analysts have described the 2025 mid-year revenue report as a strong indicator of Nigeria’s fiscal turnaround.
They see it as the outcome of a more robust revenue framework, better compliance enforcement, and continued reforms in both the oil and non-oil sectors.
However, they emphasised that sustaining this momentum, ensuring fiscal transparency, and converting revenue gains into real economic dividends remain critical to making the most of the current performance.
A professor of economics at the Olabisi Onabanjo University, Sheriffdeen Tella, attributed Nigeria’s impressive revenue performance in the first half of 2025 to more efficient tax administration and the introduction of new levies and tariffs on businesses.
According to him, the government has demonstrated greater effectiveness in recent months in collecting taxes and other statutory charges, which has significantly boosted public revenue.
He noted that many large-scale businesses and banks have been declaring substantial profits, thereby contributing more to government coffers through corporate income taxes.
Tella explained that the surge in revenue is the result of both improved compliance and expanded tax obligations across various sectors.
“The government has been quite efficient in tax and levy collection in recent months. In addition, some new taxes, tariffs and charges have been introduced on local industries and businesses. Many large-scale businesses and banks have been making huge profits, which give government income taxes or revenues. All these are responsible for improved revenues,” he said.
However, Tella cautioned that while the rising revenue figures are commendable, it was important to recognise that all taxes represent withdrawals from the economy. He stressed that the real impact would be measured by how the funds are utilised.
“What’s important is for the revenues to be spent on welfare-enhancing projects and programmes,” he stated. He expressed hope that with improved domestic revenue mobilisation, the government’s dependence on foreign loans would reduce, allowing for more sustainable economic management going forward.
Also commenting, a former president of the Chartered Institute of Bankers of Nigeria (CIBN), Dr Uche Olowu, described Nigeria’s rising revenue profile as a welcome development with promise for economic stimulation.
According to him, higher revenue gives the government greater capacity to invest in critical infrastructure and key sectors capable of driving inclusive growth.
He pointed out that historically, one of the major constraints to Nigeria’s economic progress has been its chronically low revenue base.
“More revenue means the government has more money to spend on infrastructure projects and core areas that will stimulate economic growth,” Dr. Olowu explained.
He added that the current uptick in revenue collection signals that recent fiscal and tax reforms are beginning to yield tangible results, which is encouraging for both policymakers and citizens.
However, Olowu warned that increased revenue “is only the first step” to fiscal recovery. The real challenge, he noted, lies in ensuring that these funds are used effectively and transparently in a system still grappling with entrenched corruption.
“The next hurdle should be how to get real value considering the high level of corruption bedevilling the system,” he said.
He emphasised the need for fiscal discipline and good governance to translate the improved revenue into lasting development outcomes.
He also stressed the need for the momentum to be matched with accountability and impact-focused spending.
Team Lead at the Finance Research Department of InvestingPort, Uwem Olubummo, described the revenue performance as a remarkable milestone that reflects both fiscal efficiency and potential signs of economic recovery.
According to her, the Federal Government’s revenue target for 2025 was already ambitiously set at 16.4 per cent above the total revenue collected in 2024. Yet, by June 30, 2025, revenue growth had already reached 43 per cent, nearly triple the initial benchmark.
“This is quite significant,” Olubummo said, explaining that the development may be pointing to several positive undercurrents within the economy.
He noted that such an overperformance could suggest that revenue-generating agencies like the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service have become more effective.
“It may indicate that agencies are doing a better job, either by reducing leakages, expanding the tax net, or enforcing compliance more rigorously,” he said.
Olubummo further explained that the data could also reflect increasing economic activity.
“If people and businesses are paying more taxes, it might mean that imports are rising, sales are growing, or companies are making more profit. That could point to gradual economic recovery or at least improved confidence in the system.”
She emphasised that this surplus in revenue collection opens the door for more strategic fiscal planning. With more funds than expected coming into the government’s coffers, there’s less pressure to borrow and more opportunity to invest in priority areas such as infrastructure, healthcare, and education, provided the funds are managed responsibly.
Olubummo also added that exceeding revenue expectations can send a strong positive signal to both local and international investors. “It signals fiscal discipline and resilience, and that could boost investor confidence.”
However, she cautioned that the source of the revenue matters just as much as the volume.
“If the surge in revenue is primarily from aggressive taxation on already struggling businesses or arbitrary charges, it could stifle growth in the long run. “But if it’s driven by genuine economic expansion and operational efficiency, then it’s an encouraging sign for the future of the Nigerian economy.
Vice Chairman of Highcap Securities Limited, David Adonri, described the 43 per cent growth in total revenue as ‘a major fiscal milestone,’ particularly as it significantly outpaces the baseline growth target of 16.4 per cent.
He noted that the sharp rise in non-oil tax revenue, up by over 44 per cent points to the Federal Inland Revenue Service’s (FIRS) success in deepening the tax net and enforcing compliance.
“It shows that the government is making headway in diversifying the economy away from oil dependence,” Adonri stated.
He added that increased non-oil revenue reduces exposure to external shocks such as oil price volatility, which has historically undermined Nigeria’s fiscal stability.
