Nigeria’s Revenue Rises, But Big Gaps Force Deeper Debt Dependence
By FIDELUS ZWANSON
NEW CBN data shows Nigeria’s revenue is growing, but still nowhere near the levels required to fund the 2025 budget—forcing the Federal Government into deeper reliance on borrowing.
In Q2 2025, federally collected revenue rose to ₦8.3 trillion, up 15% from the previous quarter and 30% year-on-year. Yet this represents only 43% of the quarterly budget target, highlighting a persistent mismatch between earnings and expenditure plans. Total revenue for the first half of the year reached ₦15.6 trillion, but just ₦4.6 trillion remained for distribution after statutory deductions.
Non-oil earnings continued to anchor government finances, making up 61% of Q2 revenue. However, VAT, CIT, and customs duties all missed their ambitious budget benchmarks despite modest improvements—evidence of lingering compliance gaps, weak consumer activity, and sluggish import flows.
Oil revenue improved to ₦3.2 trillion following better crude prices, but still fell far below the ₦11.5 trillion quarterly target. Production averaged 1.66 million barrels per day—well below the 2.05 million bpd assumption underpinning the budget. Analysts warn that unless output rises consistently above 1.8 million bpd, revenue will keep falling short.
The underperformance of both oil and non-oil revenue continues to strain public finances, weaken FX stability, and heighten dependence on loans. Although reforms—including tighter tax enforcement, digital monitoring, and streamlined MDA operations—are showing progress, structural issues persist.
Looking into 2026, revenue may improve if oil production rebounds and reforms deepen. But volatility in global oil prices and Nigeria’s fragile output levels remain key risks. Until the country closes its structural revenue gaps, fiscal pressure, debt reliance, and delayed projects are likely to remain defining features of the economic landscape.
