Nigeria May Have Escaped Fiscal Cliff; Now Build an Economy Worth the Sacrifice

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By Blaise Udunze

Three years after the removal of the fuel subsidy and the adjustment of the foreign-exchange regime, Nigeria’s revenue and external positions have improved significantly.

After escaping the fiscal cliff as touted, but with the United States questioning the country’s fiscal transparency, the harder question is whether these gains can be translated into an economy worthy of the sacrifice Nigerians have endured.

There is an uncomfortable concern and interrogation Nigeria must confront as it evaluates the economic reforms that began in 2023, which has to do with understanding the consequences Nigeria would have faced without reform.

What if the petrol subsidy had remained? What if the foreign-exchange market had continued under its old distortions? What if government had not intensified revenue mobilisation through taxation, VAT, customs collections, statutory revenues and electronic money transfer levies? What if the loopholes that allowed significant economic activity to escape the tax net had remained largely untouched?

The question matters because the pain associated with the reforms has become so visible that it is easy to forget the economic crisis they were designed to prevent.

Three years later, Nigeria’s economic story is more complicated. On one hand, the numbers indicate a significant expansion in the government’s revenue-generating capacity and external buffers. On the other, the lived experiences of households continue to face severe pressure from food prices, transportation costs, inflation and declining purchasing power.

Significantly, the tax collection figures have risen from N12.3 trillion in 2023 to N27.1 trillion by July 2026, a 113 percent increase in less than three years, according to figures furnished by the Nigeria Revenue Service. The agency has linked…