Strong growth in VAT and company taxes underscores industry resilience despite economic pressures and structural challenges…..
Nigeria’s manufacturing sector is fast cementing its position as a backbone of government revenue, delivering a sharp increase in tax contributions in 2025 despite a challenging economic environment.
New data from the National Bureau of Statistics (NBS) shows the sector generated a total of N1.17 trillion in Value Added Tax (VAT) over the year, a significant 45.61 percent jump from the N803.53 billion recorded in 2024. Company Income Tax (CIT) contributions also climbed strongly, reaching N881.29 billion, up 32.83 percent from the previous year.
The figures highlight a growing reliance on manufacturing as Nigeria continues efforts to strengthen its non-oil revenue base and reduce dependence on crude exports.
Analysts say the steady rise reflects both improved output across key industries and better tax compliance, reinforcing the sector’s expanding role in national economic development.
Throughout 2025, manufacturing remained the single largest contributor to VAT collections, with quarterly figures showing remarkable consistency. The sector generated N286.95 billion in the first quarter, followed by N297.68 billion in the second quarter. Contributions held firm at N290.79 billion in the third quarter and N292.12 billion in the final quarter of the year.
Company Income Tax performance, however, revealed a more uneven pattern. The sector recorded N107.90 billion in the first quarter before surging to a peak of N360.20 billion in the second quarter — the highest quarterly contribution for the year. Collections then eased to N271.34 billion in the third quarter and declined further to N141.84 billion in the fourth quarter.
The fluctuations point to the ongoing impact of macroeconomic conditions on business performance, even as the broader annual trend remains positive.
This pattern was mirrored in overall CIT collections nationwide. Total CIT fell sharply in the final quarter of 2025, dropping by nearly half compared to the previous quarter. Despite the decline, yearly collections still posted a solid increase, with total CIT for 2025 reaching N9.218 trillion.
The data underscores the manufacturing sector’s growing importance in driving Nigeria’s economic diversification agenda. Key segments including consumer goods, cement production, and industrial materials played a crucial role in boosting both output and tax revenues.
However, the growth story is not without its challenges.
Manufacturers continue to contend with rising production costs, volatile exchange rates, and persistent infrastructure gaps all of which put pressure on margins and operational efficiency.
Even so, the sector’s ability to expand its tax contributions in the face of these headwinds signals a notable level of resilience. Going forward, analysts say sustained policy support and structural reforms will be critical to maintaining momentum and unlocking even greater value from the industry.
As Nigeria pushes to build a more diversified and stable economy, manufacturing is increasingly proving to be one of its most dependable engines of growth.
