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Nigeria: taxes, the government wants to increase revenue

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by: Andrea Spinelli Barrile | April 22, 2024

Nigeria’s government is targeting a 60% increase in revenue this year in order to keep debt at sustainable levels and ease widespread hardship. Nigerian Finance Minister Wale Edun said this at an event on the world economy organized by the newspaper Semafor.

Edun said the target was “very ambitious” but necessary to reduce Nigeria’s fiscal deficit from around 6.1% of GDP to 3.8%. The government in Abuja is working to increase oil production to at least 2 million barrels per day (bpd), oil production which amounted to 1.47 million barrels per day in 2023, in contrast with the objective of government which was 1.69 million barrels per day. Increasing oil production is “the low-hanging fruit” for growing Nigeria’s revenues, Edun said: the 2 million barrels per day target involves the exploitation of condensates, a form of oil obtained from natural gas whose production is not limited by OPEC quotas.

Although typically Africa’s largest crude oil producer, Nigeria’s ability to earn foreign exchange from rising oil prices has been hampered in recent years by thefts and leaks along pipelines.

The Government of Nigeria also aims to increase revenue through “greater efficiency in the collection of taxes and other taxes and charges which the Government has the right to impose”: the government is using digital technology to improve tax collection.

President Bola Tinubu’s reforms since taking office last May have included the partial suspension of a petrol subsidy program and the devaluation of the naira. These measures have resulted in price increases for consumers, particularly for food and transport. In March, inflation stood at 33.2%, the highest level in nearly three decades. Tinubu has undertaken numerous foreign trips to Europe, Asia and the Middle East to invite investors to the country, but the fruits have not yet been reaped: “We have not seen any headline-grabbing investment commitments, but there is a lot of interest from part of foreign direct investors,” Edun said.

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