There is good reason to congratulate the Nigeria Revenue Service (NRS) and its leadership. The numbers suggest that something important is changing in the country's long-running struggle to mobilise enough domestic revenue to finance development, and the scale of the improvement is now difficult to dismiss as a statistical blip.
Tax collections rose from N12.3 trillion in 2023 to N21 trillion in 2024 and N28.3 trillion in 2025. More strikingly, the NRS collected N27.1 trillion in the first seven months of 2026 alone, already equivalent to about 96 per cent of what it collected in the whole of 2025. The service also says its tax-to-GDP ratio has increased from 10.3 per cent in 2023 to 13 per cent, with an 18 per cent target ahead, while 76 per cent of total collections now come from non-oil sources.
These are not minor administrative improvements. They represent a significant strengthening of the fiscal machinery of a country that has spent decades struggling to convert the size of its economy into sufficient government revenue. The achievement deserves recognition and a little more scrutiny.
The temptation, whenever government revenue rises sharply, is to conclude that the fiscal problem has been solved, which often is not the case. Indeed, Nigeria's improved collection figures should remind us how much further the country still must go.
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The simplest way to understand the problem is to look beyond the impressive naira figures and examine what Nigeria collects relative to the size of its economy.
Africa itself has a revenue problem. The OECD, African Union Commission and African Tax Administration Forum reported in 2025 that the average tax-to-GDP ratio across 38 African countries reached 16.1 per cent in 2023. That was an improvement, but it remained well below the 19.6 per cent average for Asia and the Pacific, 21.3 per cent for Latin America and the Caribbean and 33.9 per cent for OECD economies. Indeed, 20 of the 38 African countries covered had tax-to-GDP ratios below 15 per cent.
Nigeria is quite close to the difficult end of this continental problem. Using its internationally comparable methodology, the OECD put Nigeria's tax-to-GDP ratio at 8.2 per cent in 2023, against the African average of 16.1 per cent.
The NRS's own measure tells a more encouraging recent story, with the ratio rising from 10.3 per cent in 2023 to 13 per cent. The measures are not directly comparable because of differences in methodology and revenue coverage, but both point to the same fundamental conclusion: Nigeria has historically collected too little tax relative to the size of its economy, and the recent improvement is significant precisely because it is coming from such a low base.
This is why the NRS turnaround matters. Nigeria cannot build a modern state on an exceptionally narrow revenue base. A government responsible for roads, electricity, schools, hospitals, security, public transportation, social protection and the institutions required for private investment needs predictable domestic revenue. When that revenue is inadequate, the government has only a few alternatives: cut expenditure, borrow, sell assets or rely excessively on volatile sources such as oil.
Nigeria has tried most of them. The result has been a familiar cycle in which ambitious development needs collide with limited fiscal capacity, while borrowing becomes an increasingly expensive substitute for taxation. A stronger tax system therefore changes more than the government's spreadsheet. It can change the structure of the economy's public finances.
The NRS deserves credit for showing that Nigeria can collect considerably more. The progression from N12.3 trillion in 2023 to N21 trillion in 2024 and N28.3 trillion in 2025 is substantial. But the N27.1 trillion collected in only seven months of 2026 makes the point even more forcefully.
However, the more important question now is what happens next. An 18 per cent tax-to-GDP target, even if achieved, should not be regarded as the finish line. It would represent progress toward a stronger fiscal position, not proof that Nigeria had suddenly become a high-revenue economy. And the African comparison tells us why. The continent's average remains well below those of other regions, particularly OECD economies.
But Nigeria must also resist another temptation: assuming that the answer is simply to extract more money from the economy.
The sustainable objective is not to increase taxation on an economy that remains weak. It is to build an economy that becomes larger, more productive and more formal, allowing government revenue to rise because incomes, profits, investment and economic activity are rising.
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There is a fundamental difference between taxing a growing economy and trying to grow tax revenue from an economy that is struggling.
The first can reinforce the other. The second eventually reaches a wall. This is where the NRS's achievement becomes the responsibility of the rest of the government.
More revenue should mean more fiscal capacity, but fiscal capacity is not the same thing as development. Nigerians will ultimately judge the revenue turnaround by what they see around them: better electricity, better roads, functioning public transportation, stronger schools and hospitals, lower logistics costs, more competitive businesses and more productive jobs.
The test is whether additional revenue can help create the conditions for businesses to invest and expand, farmers to move beyond subsistence, manufacturers to produce competitively and technology companies to scale.
