Nigeria’s Presidential Fiscal Policy and Tax Reforms Committee has disclosed that the Federal Government currently allocates approximately 50 percent of its revenue to debt servicing—a trend that threatens to choke the country’s fiscal space and stall essential development projects.
According to the committee, a staggering fraction of revenue is being swallowed by interest payments on both domestic and external borrowings. This leaves insufficient funds for critical sectors like infrastructure, health, and education. The imbalance could severely undermine Nigeria’s long-term economic resilience .
The Taiwo Oyedele-led advisory panel, appointed by President Tinubu and backed by PwC Nigeria, emphasised that the tax-to-GDP ratio is currently a dismal 10.86 percent—far below the African average of 15.6 percent—highlighting a weak revenue base unable to sustain borrowing without jeopardising fiscal stability .
A central recommendation is the establishment of a unified Nigerian Revenue Service, aiming to merge over a hundred tax-collecting agencies into a singular entity. This streamlined body would oversee zero-based budgeting, long-term commitment strategies, and a reduction of more than 60 existing levies to just eight simpler, more efficient taxes .
Moreover, the panel urges cautious borrowing practices tied to clear efficiency benchmarks in public procurement. With debt servicing projected to absorb nearly one-third of the 2024 budget, these reforms are essential to avoid diverting funds from public services and economic growth initiatives .
In concrete terms, the committee’s early actions—such as scrapping VAT on diesel and abolishing multiple informal-sector taxes—demonstrate a small but meaningful shift toward reducing tax burdens and increasing compliance .
Nigeria’s alarming debt-to-revenue ratio has triggered a comprehensive reform proposal aimed at revitalising fiscal management. By centralising tax operations, reducing redundant levies, and enforcing disciplined borrowing, the country could reclaim fiscal sovereignty and free up resources for transformative investments.
