Tax Reforms and Diaspora Investments to Drive Nigeria’s Fiscal Sustainability in 2025
The Nigerian government’s tax reforms, alongside fresh initiatives to harness diaspora remittances, are set to bolster revenue streams in 2025, marking a critical turning point in the nation’s economic trajectory. This was the consensus at a panel discussion held during the launch of the Nigerian Economic Summit Group’s (NESG) 2025 Macroeconomic Outlook in Abuja, themed “Stabilisation in Transition: Rethinking Reform Strategies for 2025 and Beyond.”
Unlocking Revenue Potential through Tax Reforms
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, highlighted that Nigeria’s projected N35 trillion revenue in the 2025 Appropriation Bill could be significantly surpassed with the implementation of ongoing tax reforms. The Federal Government has estimated total revenue of N36.35 trillion for 2025, anchored on non-oil revenue sources, within a proposed N49.75 trillion budget currently under legislative review.
Oyedele emphasised that harmonising tax collection and addressing compliance gaps, particularly in VAT and income tax, could yield trillions of naira in additional revenue.
“We are closing significant leakages through harmonised tax collection systems. By improving VAT compliance, which currently has a 70% gap, we can achieve substantial gains without raising rates,” he explained. “Other reforms targeting corporate and personal income taxes will also contribute significantly to fiscal sustainability. It’s fair to say we’ve turned a corner and are heading in the right direction.”
Diaspora Remittances as a Catalyst for Growth
Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, underscored the untapped potential of diaspora remittances as a crucial driver of foreign exchange inflows and economic stability. Speaking at the event, he revealed plans to double current remittance levels through targeted policies, including the recent launch of the non-resident Bank Verification Number (BVN) and the approval of 14 new international money transfer operators (IMTOs).
“These initiatives are already showing positive results. In 2024, we recorded over $6 billion in capital inflows and external reserves exceeding $40 billion. The confidence of foreign investors is growing, and with our reforms, we expect these gains to accelerate in 2025,” Cardoso said.
He acknowledged the challenges posed by exchange rate adjustments but pointed to the opportunities they present for export competitiveness and productive investment. “The adjustment makes our currency more competitive, and foreign investors are keen to capitalise on this. The implications for exports and industrial activity are significant,” he added.
Charting a Sustainable Path Forward
Cardoso reiterated the CBN’s commitment to maintaining price and monetary stability while implementing market-oriented policies to foster long-term growth. “We will continue to evolve innovative policies that support critical sectors of our economy. Our focus is on creating a sustainable and competitive environment for businesses operating in Nigeria,” he stated.
Balancing Revenue Growth with Economic Inclusion
The discussions at the NESG event highlighted a delicate balancing act—achieving revenue growth through reforms while ensuring economic inclusion and mitigating the potential burdens on citizens. As Nigeria navigates its fiscal transition, the success of these reforms will depend on transparent implementation, robust monitoring, and sustained stakeholder engagement.
With 2025 on the horizon, the outlook presented by Oyedele and Cardoso signals cautious optimism for Nigeria’s economic future, driven by pragmatic reforms and strategic investments.
