New report shows major fiscal shift toward non-oil income, even as rising debt pressures test sustainability……
Nigeria’s fiscal landscape is undergoing a quiet but significant transformation, with tax revenue now dominating government earnings in a shift away from decades of oil dependence.
A new report by Quartus Economics reveals that taxes accounted for as much as 87% of federation revenues in 2024, marking a dramatic reversal from the country’s traditional reliance on crude oil.
Titled “Nigeria Unshackled: Inside the Steady Rise of a Fiscal State,” the report highlights how oil’s contribution has steadily declined from roughly 75% of total revenue between 2010 and 2013 to just about a quarter today.
In contrast, non-oil sources have surged. Tax revenue, which made up less than half of total earnings a decade ago, now forms the backbone of government finances. Notably, over 73% of federally collected taxes are derived from non-oil sectors, signaling broader economic participation beyond hydrocarbons.
The pace of growth has been striking. Between 2023 and 2025, Nigeria generated ₦62.3 trillion in tax revenue, with collections nearly tripling from ₦10.18 trillion in 2022 to ₦28.29 trillion in 2025. In 2025 alone, tax receipts rose by 30%, largely driven by non-oil activities, which accounted for nearly 84% of that increase.
Despite this progress, the report raises red flags over the country’s mounting debt burden.
Public debt has expanded sharply over the past decade, now standing at more than 14 times its 2015 level. Domestic debt has grown over eightfold, while external debt has increased more than five times compared to 2014 levels.
Key fiscal indicators reflect the strain. Nigeria’s debt-to-GDP ratio climbed to nearly 31% in 2023, while the debt service-to-revenue ratio reached around 40%, underscoring the growing cost of borrowing.
According to the report, the surge in debt can be traced back to the 2014 oil price crash, which forced successive governments to borrow more aggressively to finance infrastructure and public spending amid declining revenues.
While inflation has eased from above 30% in 2024 to around 15%, borrowing costs remain elevated, limiting the economy’s capacity to expand and generate jobs.
Beyond fiscal metrics, deeper structural challenges persist. Rising poverty levels, declining living standards, rapid population growth, urbanisation, and insecurity continue to weigh heavily on economic stability.
Still, the report maintains that Nigeria’s debt remains within manageable limits for now. The key, it argues, lies in how borrowed funds are utilized.
“When public debt is efficiently sourced, well-structured, and prudently deployed, it can drive growth and improve social outcomes,” the report noted, warning that mismanagement could instead deepen economic vulnerability and dependence on further borrowing.
An important implication of the revenue shift is the changing relationship between citizens and the state. As more government income comes directly from taxpayers rather than oil exports, expectations around transparency and accountability are likely to rise.
Ultimately, sustaining the gains from this fiscal transition will depend on disciplined economic management and the government’s ability to convert increased revenues into tangible improvements in infrastructure, services, and overall living standards.
