Nigeria’s Finance Minister and Coordinating Minister for the Economy, Wale Edun, announced that the successful implementation of ongoing domestic reforms will boost Nigeria’s revenue-to-Gross Domestic Product (GDP) ratio by 17% in the next three years. Speaking at the launch of Afrinvest’s 2023 Nigerian banking sector report, Edun stated that the revenue-to-GDP ratio is expected to rise to 25% in 2026 from the current 8% in 2023. Additionally, he mentioned that the reforms would increase the tax-to-GDP ratio from 10% in the current year to 18% by 2026.
Edun highlighted the benefits of ongoing reforms, including forward sales transactions, attracting international capital flows, executive orders to enhance the domestic supply of foreign exchange, and reforms in the foreign exchange markets. The minister also noted that the removal of petrol subsidy, the establishment of a fiscal policy and tax reforms committee, elimination of smuggling and theft, and the strict enforcement of existing rules contributed to increased revenue.
On the sidelines of the event, the Group Managing Director of Afrinvest, Abiodun Keripe, suggested that the government should diversify its sources of income instead of consistently raising money in the capital market. He expressed concerns that the government’s reliance on capital markets was crowding out the private sector, as investors prefer government bonds due to higher returns.
Zacch Adedeji, the Chairman of the Federal Inland Revenue Service (FIRS), had previously committed to surpassing Africa’s tax-to-GDP ratio of 16%, aiming to extend Nigeria’s ratio to 18%. The former FIRS Chairman, Muhammed Nami, had reported an increase in the tax-to-GDP ratio from 6% to 10.86% within two years.