The Federal Government’s revenue rose by 82.4 per cent from N6.8tn in 2023 to N12.4tn in 2024, driven by the unification of the foreign exchange rates, enhanced tax administration, and reforms in treasury remittances, the World Bank has said.
The development represents a N5.6tn increase in federally collected revenue and a significant rise in the government’s revenue-to-GDP ratio from 2.9 per cent in 2023 to 4.5 per cent in 2024.
The World Bank disclosed this in its latest Nigeria Development Update report, titled “Building Momentum for Inclusive Growth” in Abuja. The Bretton Woods institution attributed the revenue growth to three major fiscal reforms carried out by the Nigerian government in the last two years.
It, however, noted that revenues remain low, limiting the government’s ability to fund development spending despite improvements in public financial management
“Gains from FX unification and improved revenue administration boosted FGN’s revenues. Revenues increased sharply from N6.8tn (2.9 per cent of GDP) in 2023 to N12.4tn (4.5 per cent of GDP) in 2024,” the report said.
Gains from FX unification and improved revenue administration boosted FGN’s revenues. Revenues increased sharply from N6.8tn (2.9 per cent of GDP) in 2023 to N12.4tn (4.5 per cent of GDP) in 2024, due to three factors.
According to the report, the unification of the official and parallel exchange rates significantly increased government revenue from oil, customs duties, and other FX-linked sources. Previously, such inflows were remitted to the Federation Account at the official rate, which was around 53 per cent lower than the market rate in 2022.
This disparity, the bank said, had led to large revenue losses before the reform.
The second driver of growth, the report noted, was enhanced tax administration. Specifically, the deployment of the TaxPro Max platform by the Federal Inland Revenue Service and the implementation of withholding VAT at source by targeted sectors led to a sharp increase in non-oil revenue.
It said the third key factor was the reform of revenue remittances from Ministries, Departments, and Agencies, as well as Government-Owned Enterprises. The policy, introduced in December 2023, standardised and automated transfers of independent revenues to the treasury.
This contributed an additional 0.8 percentage points to Nigeria’s revenue-to-GDP ratio in 2024, the World Bank noted.
“First, the unification of the FX rate led to a significant revenue windfall, as various FX- denominated revenues (oil, VAT, CIT, and customs) used to be transferred to the Federation at the official rate, which was 53 per cent lower than the parallel rate in 2022, causing large forgone revenues of N6.2tn.
“Second, enhanced tax administration, including digital tax collection via the TaxProMax system and the implementation of withholding VAT at source by certain sectors, also helped boost revenues as evidenced by the 86.1 per cent increase in locally collected VAT in 2024.
“Third, FGN’s independent revenues increased by 0.8 percentage points of GDP in 2024, following the December 2023 reform that standardised and automated remittances from MDAs and GOEs to the treasury,” the World Bank stated.