Comercio Partners Report: 10 years of money market and living costs Part 5

The fifth part of Comercio Partners’ 10 Years of Money Market and Living Costs report examines the structural fiscal, security and political challenges that have shaped Nigeria’s economic performance over the past decade.

It traces the country’s weak tax collection and heavy dependence on oil revenues, highlighting recent improvements in tax receipts while noting the risks posed by naira depreciation and the need to broaden the tax base.

The report also examines Nigeria’s rising debt service burden, arguing that the key fiscal challenge is not simply the size of public debt but the proportion of government revenue committed to servicing it.

It highlights the importance of ongoing tax reforms in improving revenue generation while balancing the need to maintain investor confidence and fiscal predictability.

The Revenue Failure That Preceded Everything

Nigeria entered the decade with one of the lowest tax-to-GDP ratios among major economies, consistently below 7%, compared with a sub-Saharan African average of 14–16% and an emerging-market benchmark of 18–20%.

The issue was not only low income; it was weak tax collection, narrow coverage and limited political will. Oil revenues carried the fiscal system, so when oil receipts fell, government spending on infrastructure, health, education and social protection came under pressure.

This left Nigeria exposed to every major shock. The 2016 recession found the government with little fiscal buffer. COVID-19 exposed the limits of targeted cash transfers.

The 2023 subsidy removal revealed the absence of a ready safety net for an economy where most workers are informal. Tax collection has improved sharply in recent years. FIRS revenue rose significantly from ₦5.3 trillion in 2019 to ₦12.3 trillion in 2023 and further surged to ₦21.6 trillion in 2024,…