Nigeria’s agric sector VAT has emerged as a growing revenue contributor, remitting ₦18.3bn in Value Added Tax (VAT) between 2022 and 2024, according to fresh data from the National Bureau of Statistics (NBS).
The development highlights the sector’s increasing formalisation and reinforces its pivotal role in the Federal Government’s economic diversification drive.
Figures from the NBS report on sectoral contributions to VAT revealed that collections rose from ₦4.25bn in 2022 to ₦4.9bn in 2023, representing a 15.29 percent increase.
By 2024, the agric sector VAT inflows nearly doubled to ₦9.15bn, pushing the three-year total to ₦18.3bn — a 119.29 percent growth.
Analysts say this upward trend reflects an expanding agribusiness landscape but caution that policy support is required to sustain the momentum, secure food systems, and shield smallholder farmers from potential tax shocks.
Although basic food items remain VAT-exempt under Nigeria’s tax framework, agro-allied industries along the value chain are contributing significantly to VAT collections.
Locally produced animal feeds, live cattle, poultry, and agricultural seedlings are charged VAT at zero percent, while value-added processes attract standard rates.
According to Dr. Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise (CPPE), the figures reflect more than just direct farm output.
“The agro-allied sector is one of the most competitive within Nigeria’s manufacturing space. Because of their strength in backward integration and the demand for fast-moving consumer goods, their VAT contributions are naturally high,” Yusuf explained.
He added that employee-related taxes and company levies in large-scale agribusinesses also feed into the VAT statistics, suggesting that the sector’s value chain is broadening.
The President of the All Farmers Association of Nigeria (AFAN), Kabir Ibrahim, welcomed the figures, describing them as a positive indicator of both agribusiness expansion and government revenue mobilisation.
“As VAT payments rise, it shows agribusinesses are growing. Government will also have more funds for projects that benefit the economy.
Eventually, this gives farmers the confidence to scale and contributes to national prosperity,” Ibrahim noted.
He stressed, however, that the fastest way to boost VAT inflows further is to integrate informal farmers into the tax net.
“If we can formalise more smallholder farmers, VAT will grow and Nigeria’s diversification agenda will move faster,” he added.
With new tax laws scheduled to take effect in January 2026, stakeholders are keeping a close watch.
While the reforms aim to streamline taxation and reduce leakages, experts fear they could squeeze smallholder farmers if not properly implemented.
Ibrahim argued that the reforms should be used to formalise agribusiness, not overburden it.
“If leakages are blocked and incentives provided, agriculture can grow significantly and reduce Nigeria’s dependence on oil,” he said.
Yusuf echoed the concern, noting that “anything that has to do with food and food security should not be subjected to a serious tax burden.”
He explained that while VAT has been an important source of revenue, over-taxation risks discouraging food production and fuelling inflation.
The recurring theme among stakeholders is that taxation should never stifle growth. Instead, it should serve as a tool to encourage investment, processing, and exports.
Agricultural expert and CEO of FACCO West Africa, Femi Adelayo, emphasised the importance of reducing the tax burden on inputs and equipment.
“Excessive taxation on machinery raises costs, which are eventually passed to consumers, driving up inflation,” Adelayo warned.
He also highlighted the strain of informal taxes, from local government levies to roadside charges, which further erode farmers’ margins.
He called for targeted support measures, including low-interest credit, storage facilities, mechanisation, and subsidies. “Agriculture is like planting a seed. You don’t eat it immediately; you nurture it. The government must invest now and reap later,” he said.
Experts agree that Nigeria’s best chance of scaling agriculture’s contribution to national revenue lies in value addition and structured exports.
Adelayo noted, “The government can earn more if we produce more and export more.
But exports should be structured — we need clear agreements on what we are exporting, whether cocoa, cashew, or soybeans, and ensure value addition before shipment.”
AFAN’s Ibrahim applauded President Bola Tinubu’s temporary ban on raw shea nut exports, calling it a bold step toward keeping processing and jobs within Nigeria.
He cited Dangote’s urea exports as a model of how value addition strengthens foreign exchange inflows.
Despite encouraging VAT figures, challenges remain. Rising energy costs, logistics bottlenecks, currency volatility, and poor infrastructure continue to hinder productivity.
Yusuf insists that tackling these bottlenecks will help sustain VAT growth and strengthen agriculture’s role in diversification.
“There is a clear correlation between agricultural growth and government revenue.
But the sector needs stable power, good roads, and access to affordable finance,” he said.
All stakeholders converge on one message: taxation should not suffocate agriculture.
Instead, incentives and harmonised policies should enable agribusinesses to expand, employ more Nigerians, and boost government revenue in the long term.
The steady growth of VAT from the agricultural sector is a welcome sign for a country striving to diversify away from oil dependency.
However, experts stress that these numbers alone do not guarantee food security or sustained development.
To truly harness agriculture’s potential, Nigeria must balance taxation with incentives, integrate informal farmers, and prioritise value addition and structured exports.
With supportive policies, the ₦18.3bn VAT growth recorded between 2022 and 2024 could be just the beginning of agriculture’s greater role in Nigeria’s trillion-dollar economy ambition.