Market News

by Mark Itsibor

Minister of Finance and Coordinating minister of the Economy, Taiwo Oyedele, has declared that Nigeria cannot build a prosperous future on borrowed funds, calling on the country to develop a robust fiscal architecture capable of financing its development from internally generated revenues.

The Minister made the declaration in Abuja while delivering the Lead Plenary Address at the 28th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN), themed “Tax Reforms and Global Relevance: Positioning Nigeria’s Tax System for a Sustainable Future.”

Oyedele said, “Nigeria cannot continue to finance development primarily through borrowing. We must build a fiscal system capable of sustainably supporting critical infrastructure, quality education, affordable healthcare, security, and social protection.”

The warning carries considerable weight given the trajectory of Nigeria’s debt profile.

According to the Debt Management Office (DMO), Nigeria’s total public debt — covering federal and state governments — climbed to N159.28 trillion as of December 31, 2025.

That figure, equivalent to approximately $111 billion at the CBN’s official exchange rate of N1,435.25 per dollar, represents a year-on-year increase of N14.61 trillion, or 10.1 per cent, from the N144.67 trillion recorded in December 2024.

When President Bola Tinubu assumed office on May 29, 2023, Nigeria’s total public debt stood at N87.38 trillion, according to the DMO.

Since then, the debt stock has grown by approximately N71.82 trillion — meaning the current administration accounts for roughly 45 per cent of the country’s entire debt accumulation.

With President Bola Tinubu’s government projecting N17.89 trillion in borrowings for 2026 alone, and having recently sought National Assembly approval for an additional $6 billion in external loans, analysts warn the debt burden could rise significantly further by year-end.

Domestic debt remained the largest component of the debt stock at N84.85 trillion, representing 53.27 per cent of the total, while external debt stood at N74.43 trillion.

The federal government alone holds N80.49 trillion in domestic obligations and N66.27 trillion in external liabilities. Notably, the DMO’s December 2025 figures do not yet incorporate the recently approved N8.3 trillion facility from the United Arab Emirates and UK Export Finance.

Fiscal analysts have flagged the unsustainability of the country’s debt trajectory.

A review by the Nigerian Economic Summit Group found that debt servicing consumed over 100 per cent of the federal government’s retained revenue — meaning that every naira spent on infrastructure, healthcare, education, or security was, in effect, financed through borrowing.

It is against this backdrop that Oyedele’s remarks at the CITN conference struck a particularly urgent note. He told an audience of tax professionals, policymakers, and industry stakeholders that the conversation around tax reform goes beyond technical discourse. “This is strategic to Nigeria’s future.”

He described the federal government’s ongoing tax reform agenda as an effort to build “a tax system that is globally relevant, economically competitive, socially equitable, and fiscally sustainable.”

The minister noted that longstanding structural weaknesses — including multiple taxation, fragmented administration, weak compliance, widespread informality, and high compliance costs for businesses — had rendered the existing fiscal framework untenable.

Among the key reform measures already implemented, Oyedele highlighted the exemption of minimum-wage earners from personal income tax and the reduction of tax burdens for low- and middle-income earners. He also outlined plans to modernise the value-added tax system by expanding input VAT credits, clarifying exemptions, and zero-rating essential goods and services.

On subnational coordination, the minister praised the 15 states that have already enacted tax harmonisation legislation, while urging others to follow suit, noting that “a fragmented tax system cannot facilitate a globally competitive economy.”

Oyedele said, will be central to the reform’s implementation, with government prioritising automation, data integration, and digital compliance systems — including VAT fiscalisation, the National Single Window, and the Rev360 platform.

“The goal is simple: reduce human discretion, increase efficiency, improve transparency, and make compliance easier and cheaper.”

He also reaffirmed the government’s commitment to taxpayer protection through the establishment of the Office of the Tax Ombud and strengthened dispute resolution mechanisms.

The minister expressed confidence that Nigeria possesses the requisite talent, market scale, and entrepreneurial energy to build one of the strongest fiscal systems on the continent.

“A globally relevant tax system is not one that merely collects revenue. It is one that supports competitiveness, encourages enterprise, protects citizens, attracts investment, and strengthens national development. That is the future we are building.”

The CITN’s 28th Annual Tax Conference brought together senior tax practitioners, regulators, and policymakers to deliberate on Nigeria’s reform agenda and its implications for the country’s standing in the global economy.

The institute, which Oyedele commended for its role in shaping fiscal policy discourse, has been a consistent advocate for rationalising Nigeria’s tax framework.