Nigeria’s revenue structure has shifted significantly over the past decade, with tax income now accounting for 87 percent of federation revenues, according to a report by Quartus Economics, a Nigerian research firm.
In the report, titled, ‘Nigeria Unshackled: Inside the Steady Rise of a Fiscal State,’ the firm said the development marks a break from decades of dependence on crude oil, with oil revenues now contributing just about a quarter of total earnings, down from roughly three-quarters in the pre-2014 period.
“While oil revenue accounted for three quarters of federation revenues in the pre-crisis years (2010–2013), today, oil revenue now accounts for just about a quarter of federation revenues,” the report said.
“Importantly, tax revenue that accounted for less than half of revenues in 2014 contributed up to 87% of federation revenues in 2024 while non-oil sources now account for more than 73% of federally collected taxes.”
Quartus Economics added that between 2023 and 2025, Nigeria generated N62.3 trillion in taxes, with the non-oil sector contributing over 73 percent in revenue mobilisation.
“In 2025, tax collection grew by 30%, driven primarily by non-oil taxes, which accounted for nearly 84% of the growth,” the report said.
“Within 3 years, Nigeria’s tax revenue nearly tripled from N10.18 trillion in 2022 to N28.29 trillion in 2025.”
Despite the gains, the report warned that rising public debt continues to pose risks to fiscal stability.
“However, public debt stock is more than 14x its 2015 level, while domestic debt is more than 8x, and external debt is more than 5x its 2014 level,” the firm added.
The report noted that Nigeria’s debt-to-gross domestic product (GDP) ratio rose to nearly 31 percent in 2023, while debt service-to-revenue climbed to about 40 percent, reflecting growing pressure on public finances.
It said the increase in borrowing followed revenue shortfalls after the 2014 oil price crash, which forced governments to rely more on debt to fund infrastructure and public spending.
“Elevated levels of public debt, rising poverty levels and sharp drops in standard of living for many Nigerians remain a concern,” the report said.
Quartus Economics added that while inflation moderated from over 30 percent in 2024 to about 15 percent, borrowing costs remain high, limiting growth and job creation.
The report also pointed to demographic pressures such as rapid population growth, urbanisation, and insecurity as factors compounding economic vulnerabilities.
The report said although Nigeria’s debt remains within sustainable thresholds, there is a need for prudent borrowing and effective deployment of funds.
“When public debt is efficiently sourced, well structured, and prudently deployed, it can both enhance social stability and serve as a catalyst for transformative economic growth,” it said.
“Otherwise, it can become a plague that keeps a country an its economy both underdeveloped and continually dependent on more and more debt.”
Quartus Economics added that as tax revenues grow, citizens are likely to demand greater accountability from government.
“With enhanced revenues that draw more from citizens’ obligatory contributions… Nigerians would almost certainly demand more accountability,” the report said.
The report also said that sustaining the gains from revenue diversification will depend on fiscal discipline and the ability of the government to translate revenues and borrowings into measurable economic outcomes.
