Nigeria’s economic reforms are beginning to yield significant fiscal relief, as the country now spends less than 50 per cent of its revenue on debt servicing, according to the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee (FPTRC), Mr. Taiwo Oyedele.
Speaking at PriceWaterhouseCoopers (PwC)’s Executive Summit on Nigeria’s Tax Reform in Lagos on Monday, Oyedele said the reforms had drastically reduced the government’s debt burden, which previously consumed almost 97 per cent of the country’s revenue. The summit, themed “The New Tax Era: What Nigeria’s Tax Reform Means to Individuals and Businesses,” highlighted the government’s fiscal recovery strategy and its implications for businesses and citizens.
Oyedele explained that the country’s financial management had been on the brink of collapse before the reforms. “We’ve cleared unmet forex futures that were more than $7bn. External reserves have grown from under $4bn to over $20bn today, budget deficits are declining, and we’re spending more on infrastructure,” he said.
The reforms have improved Nigeria’s tax-to-GDP ratio from under 10 per cent to 13.5 per cent within two years. Additionally, the government has stopped printing money to fund expenses, opting instead to repay part of the N30 trillion Ways and Means advances accumulated by the previous administration.
According to Oyedele, failure to initiate the reforms would have led to a total economic collapse, likening the potential scenario to Zimbabwe and Venezuela, where hyperinflation eroded the value of their currencies.
“Nigeria today, without reforms, would have been printing more naira, accumulating bigger deficits, and servicing debts with over 100 per cent of its revenue. You would hold N100,000 and still not find petrol to buy,” he said, holding up a Zimbabwean $100 trillion note as a stark warning.
Oyedele lamented that Nigeria lost a decade of economic growth by delaying crucial fiscal and tax reforms. He projected that if these reforms had been implemented 10 years ago, Nigeria could have become a $1 trillion economy by now, with the naira trading below N300/$ and petrol prices under N300 per litre.
“Comparing Nigeria’s balance of payments with Kenya and South Africa in the past decade, the naira has lost six times more value. A stable policy environment would have expanded Nigeria’s middle class and attracted global investors,” he noted.
The FPTRC chair further revealed how petrol subsidies drained the country’s resources, forcing the government to divert tax revenues and borrow excessively. “NNPC used its tax obligations to fund subsidies; still, it wasn’t enough. Other operators’ taxes were also used, and we kept printing naira to fill the gap,” Oyedele said, stressing that the subsidy system was corrupt and unsustainable.
He noted that removing subsidies was necessary to save the economy from fiscal collapse, as Nigeria was running out of funds to sustain the regime.
On tax reforms, Oyedele announced that 97 per cent of informal sector operators have been legally exempted from paying taxes under the new system. “Only the top 3 per cent of informal sector players can afford taxes. Let the bottom 97 per cent breathe—when they grow, they’ll have the capacity to pay,” he said.
The reforms also include stricter measures to combat tax evasion, ensuring that large businesses cannot underdeclare revenue to fall under tax exemption thresholds.
The Federal Government has already signed four new tax bills into law, which will take effect from January 1, 2026. Highlights include:
Exemption of employees earning less than N800,000 annually from personal income tax.
Harmonisation of federal taxes, with the Federal Inland Revenue Service (FIRS) as the sole collector.
Taxing foreign entities controlled or effectively managed from Nigeria.
Introduction of rules on indirect transfers to prevent multinational tax avoidance.
Regional Senior Partner at PwC West Market Area, Sam Abu, said tax reforms alone would not solve Nigeria’s fiscal challenges, stressing the need for partnerships among government, business leaders, and private sector players.
“Policy alone won’t deliver. Real change requires sincerity, integrity, and collaboration to build the kind of economy we all want,” Abu said.
Similarly, PwC’s Tax and Regulatory Service Leader, Chijioke Uwaegbute, noted that the new tax rules align Nigeria with global best practices, ensuring the country gets its fair share of taxes from multinational operations.