The Centre for the Promotion of Private Enterprise reports that Nigeria’s fiscal and tax reforms have generated significant gains, yet rising inflation and Naira depreciation have eroded their real value. Chief Executive Officer Muda Yusuf notes that removing fuel subsidies and unifying exchange rates have markedly increased government revenues and expanded fiscal space, allowing for greater public investment. Collections from Value Added Tax and Company Income Tax have improved, reflecting stronger compliance and a gradual economic recovery. Subnational governments have also recorded higher revenues, which are being allocated to key sectors such as agriculture, infrastructure, and social development.
Nevertheless, the current inflation rate of 21.12 percent and the Naira’s depreciation to N1,455 per dollar have moderated the real impact of fiscal reforms implemented over the past two years. Moreover, Nigeria’s $36.7 billion budget remains relatively small compared with regional peers like South Africa, Algeria, and Egypt, limiting the government’s capacity for transformative investments.
To address these challenges, the Centre has urged the federal government and subnational authorities to prioritize investments in critical infrastructure—roads, power, ports, and digital networks—to reduce business costs and boost competitiveness. It recommends adjusting fiscal assessments for inflation and exchange‑rate effects, broadening and diversifying the revenue base, and focusing high‑impact spending on infrastructure, food systems, productivity, and security. Strengthening subnational fiscal capacity, implementing flexible tax reforms, and reinforcing fiscal discipline across all government levels are also emphasized.
By adopting these measures, Nigeria can build on the progress of its fiscal and tax reforms, deepen revenue diversification, improve spending efficiency, and align fiscal outcomes with real economic performance. Prudent management and stakeholder collaboration can lay the foundation for a more resilient, productive, and inclusive Nigerian economy.
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