In a landmark achievement for Nigeria’s economy, the nation’s non-oil revenue collection surged by an impressive 40.5% to reach ₦20.59 trillion in 2024, as reported by the Budget Office of the Federation in its third-quarter budget implementation report. This remarkable growth underscores Nigeria’s ongoing efforts to diversify its revenue base, reduce its dependence on volatile oil revenues, and build a more resilient and sustainable economy. The milestone comes at a critical juncture, as Nigeria navigates complex economic challenges, including inflation, currency depreciation, and rising debt levels. The surge in non-oil revenues signals a promising shift toward a more diversified economic framework, offering hope for long-term fiscal stability and growth.
Breaking Down the Numbers: A Closer Look at Revenue Performance
The Budget Office’s third-quarter report provides a detailed snapshot of Nigeria’s fiscal performance in 2024. The federal government’s total revenue for the first nine months of the year reached ₦26.41 trillion, marking a 36% increase from the ₦19.42 trillion collected during the same period in 2023. Within this total, non-oil revenues accounted for ₦20.59 trillion, reflecting the aforementioned 40.5% growth compared to the ₦14.65 trillion recorded in the previous year. In contrast, oil revenues contributed ₦5.82 trillion, growing by a more modest 23.7% from the ₦4.70 trillion collected in 2023.
This disparity in growth rates between oil and non-oil revenues highlights a pivotal shift in Nigeria’s fiscal dynamics. Non-oil revenues now constitute the lion’s share of the federal government’s income, accounting for approximately 78% of total revenue in 2024. This marks a significant departure from Nigeria’s historical reliance on crude oil, which has traditionally dominated government revenues and export earnings. The robust performance of non-oil sectors not only reflects the success of targeted reforms but also signals a structural transformation in Nigeria’s economy, aligning with long-standing policy goals to diversify revenue streams and reduce vulnerability to global oil market fluctuations.
Key Drivers of Non-Oil Revenue Growth
The 40.5% surge in non-oil revenues can be attributed to a combination of factors, including improved tax administration, growth in key non-oil sectors, enhanced trade activities, and strategic policy reforms. Below, we explore the primary drivers behind this achievement:
Enhanced Tax Administration and Compliance: The Federal Inland Revenue Service (FIRS) has been a key player in driving non-oil revenue growth. Over the past few years, the agency has implemented a series of reforms aimed at improving tax collection efficiency and broadening the tax net. These include the adoption of technology-driven solutions, such as electronic tax filing and payment platforms, which have streamlined processes, reduced leakages, and enhanced transparency. The FIRS has also intensified efforts to bring more businesses, particularly those in the informal sector, into the tax system. This has been achieved through taxpayer education campaigns, simplified tax processes, and stricter enforcement measures to curb evasion.
In 2024, the FIRS reported significant progress in corporate income tax (CIT) and value-added tax (VAT) collections, which are major components of non-oil revenue. The introduction of automated tax assessment systems and data analytics has enabled the agency to identify and target high-revenue taxpayers more effectively. Additionally, collaborations with state governments to harmonize tax administration have reduced double taxation and encouraged compliance among businesses operating across multiple jurisdictions.
Growth in Non-Oil Sectors: Several non-oil sectors have emerged as key contributors to Nigeria’s revenue growth in 2024. The agricultural sector, which employs a significant portion of the population, has benefited from government interventions aimed at boosting productivity. Programs such as the Anchor Borrowers’ Programme, which provides credit to smallholder farmers, and subsidies for inputs like fertilizers and seeds have led to increased agricultural output. Crops such as rice, maize, and cassava have seen particularly strong growth, driven by improved farming techniques and access to markets.
The telecommunications sector has also been a major driver of non-oil revenue, fueled by Nigeria’s rapidly growing digital economy. With one of the highest mobile penetration rates in Africa, Nigeria has seen a surge in demand for data services, mobile banking, and e-commerce. Telecom operators have reported record revenues, which have translated into higher tax contributions through CIT and VAT. The rollout of 5G networks in major cities has further accelerated growth in this sector, positioning Nigeria as a hub for digital innovation in the region.
Manufacturing, though still a relatively small contributor to GDP, has also shown resilience. Government incentives, such as tax holidays for pioneer industries and support for local production, have encouraged investment in manufacturing. The growth of domestic industries, particularly in food processing, cement production, and textiles, has contributed to both direct and indirect tax revenues.
Customs Revenue and Trade Facilitation: The Nigeria Customs Service (NCS) has played a critical role in boosting non-oil revenues through increased collections from import duties, excise duties, and other trade-related levies. In 2024, the NCS reported a significant uptick in revenue, driven by the recovery of global trade volumes and Nigeria’s active participation in the African Continental Free Trade Area (AfCFTA). The AfCFTA, which aims to create a single market for goods and services across Africa, has opened new opportunities for Nigerian exporters, particularly in non-oil sectors such as agriculture and manufactured goods.
The modernization of customs processes has also been a game-changer. The adoption of electronic clearance systems, such as the Nigeria Integrated Customs Information System (NICIS), has reduced delays at ports, curbed smuggling, and improved revenue collection. Additionally, the NCS has strengthened its anti-smuggling operations, particularly along Nigeria’s porous borders, leading to higher recoveries of unpaid duties and penalties.
Policy Reforms and Fiscal Incentives: The federal government’s policy reforms have created a more enabling environment for non-oil revenue generation. The Finance Act, which has been revised annually since 2019, has introduced measures to enhance revenue mobilization while supporting economic growth. For example, the act has expanded the scope of VAT to include digital transactions, capturing revenue from e-commerce platforms and digital service providers. It has also introduced incentives for small and medium enterprises (SMEs), such as reduced tax rates and exemptions, to encourage formalization and compliance.
Other reforms, such as the implementation of the Treasury Single Account (TSA) and the Integrated Payroll and Personnel Information System (IPPIS), have improved the efficiency of government revenue management. By centralizing revenue collection and expenditure, these systems have reduced leakages and ensured that funds are properly accounted for.
Contextualizing Nigeria’s Economic Diversification Journey
Nigeria’s economy has historically been heavily dependent on crude oil, which at its peak accounted for over 90% of export earnings and a significant portion of government revenue. This reliance has made the country vulnerable to external shocks, such as fluctuations in global oil prices and disruptions in domestic production. The oil price crash of 2014–2016, combined with militancy in the Niger Delta, exposed the fragility of Nigeria’s mono-economic model, leading to a recession and severe fiscal challenges.
Since then, successive administrations have prioritized economic diversification as a core policy objective. The Economic Recovery and Growth Plan (ERGP) of 2017–2020 and the National Development Plan (2021–2025) have outlined strategies to promote non-oil sectors, enhance export competitiveness, and improve fiscal sustainability. These plans emphasize investments in agriculture, manufacturing, solid minerals, and the digital economy, as well as reforms to improve the business environment and attract foreign direct investment (FDI).
The 40.5% surge in non-oil revenues in 2024 represents a significant milestone in this diversification journey. It reflects the cumulative impact of years of policy implementation, structural reforms, and investments in key sectors. However, the achievement also comes against the backdrop of ongoing economic challenges, including double-digit inflation, a depreciating naira, and a rising debt burden. These challenges underscore the need for sustained efforts to consolidate gains and address structural weaknesses in the economy.
Implications for Fiscal Sustainability and Economic Resilience
The growth in non-oil revenues has profound implications for Nigeria’s fiscal sustainability and economic resilience. By reducing reliance on oil, the government can better shield the economy from external shocks, such as oil price volatility or production disruptions. This is particularly important given the global transition to renewable energy, which could reduce demand for fossil fuels in the long term.
Fiscal Stability: The increase in non-oil revenues provides the government with a more stable and predictable income stream, enabling better budget planning and execution. In 2024, the federal government’s ability to meet its expenditure obligations, including salaries, infrastructure projects, and debt servicing, has been bolstered by the higher revenue base. This has reduced the need for excessive borrowing, which has been a concern in recent years given Nigeria’s rising debt-to-GDP ratio.
Economic Diversification: The growth in non-oil sectors strengthens Nigeria’s economic diversification efforts, reducing the risks associated with over-reliance on a single commodity. By fostering growth in agriculture, manufacturing, and services, the government is creating a more balanced economy that can generate jobs, reduce poverty, and drive inclusive growth. This is particularly important in a country with a young and growing population, where unemployment and underemployment remain significant challenges.
Foreign Exchange Earnings: Non-oil exports, such as agricultural products and manufactured goods, have the potential to boost Nigeria’s foreign exchange earnings, reducing pressure on the naira. In 2024, non-oil exports, including cocoa, sesame seeds, and processed foods, have shown strong growth, supported by government initiatives to promote export-oriented industries. The AfCFTA is expected to further enhance Nigeria’s export potential by providing access to a market of over 1.3 billion people.
Private Sector Development: The growth in non-oil revenues reflects the increasing role of the private sector in Nigeria’s economy. SMEs, which form the backbone of the non-oil sector, have benefited from government support and improved access to finance. Initiatives such as the Development Bank of Nigeria (DBN) and the Central Bank of Nigeria’s (CBN) intervention funds have provided affordable credit to businesses, enabling them to expand operations and contribute to tax revenues.
Challenges and Risks to Sustained Growth
Despite the impressive growth in non-oil revenues, Nigeria faces several challenges that could hinder sustained progress. Addressing these challenges is critical to maintaining the momentum of economic diversification and ensuring long-term fiscal sustainability.
Infrastructure Deficits: Nigeria’s infrastructure deficits, particularly in power, transportation, and logistics, remain a major barrier to non-oil sector growth. Unreliable electricity supply, for example, increases production costs for manufacturers and limits the competitiveness of Nigerian goods in international markets. While the government has made progress in improving infrastructure, such as through the rehabilitation of major highways and the expansion of renewable energy projects, more investment is needed to close the gap.
Security Concerns: Insecurity, including banditry, kidnapping, and communal conflicts, continues to disrupt economic activities, particularly in the agricultural sector. Farmers in northern Nigeria, a key agricultural region, have faced challenges accessing their farmlands due to security threats, leading to reduced output and higher food prices. Addressing these security issues is essential to sustaining growth in agriculture and other non-oil sectors.
Macroeconomic Instability: Nigeria’s economy remains vulnerable to macroeconomic challenges, including inflation and currency depreciation. In 2024, inflation has remained in double digits, driven by rising food and energy prices. The naira’s depreciation has also increased the cost of imported inputs, affecting businesses in the manufacturing and services sectors. The CBN’s efforts to stabilize the currency through monetary policy interventions have had mixed results, highlighting the need for coordinated fiscal and monetary policies.
Revenue Leakages and Corruption: Despite improvements in revenue collection, leakages and corruption remain significant challenges. Weaknesses in public financial management, including inefficiencies in revenue remittance and expenditure tracking, undermine the government’s ability to maximize revenue. Strengthening anti-corruption measures and enhancing transparency in revenue administration are critical to sustaining the gains in non-oil revenue.
Global Economic Uncertainties: The global economic environment poses risks to Nigeria’s non-oil revenue growth. Factors such as trade disruptions, supply chain challenges, and rising interest rates in advanced economies could affect demand for Nigerian exports and limit access to foreign capital. The government must navigate these uncertainties by strengthening domestic resilience and fostering regional trade partnerships through the AfCFTA.
Policy Recommendations for Sustaining Non-Oil Revenue Growth
To consolidate the gains in non-oil revenue and ensure long-term economic sustainability, the government should consider the following policy recommendations:
Invest in Infrastructure: The government should prioritize investments in critical infrastructure, particularly in power and transportation. Public-private partnerships (PPPs) can be leveraged to finance projects such as solar power plants, rail networks, and port modernization. Improving infrastructure will reduce production costs, enhance competitiveness, and attract investment to non-oil sectors.
Strengthen Security: Addressing security challenges is essential to sustaining growth in agriculture and other sectors. The government should enhance coordination between security agencies, invest in community-based policing, and address the root causes of insecurity, such as poverty and unemployment.
Deepen Tax Reforms: The FIRS and other revenue agencies should continue to modernize tax administration through technology and data analytics. Expanding the tax net to include more informal sector businesses, while ensuring fairness and transparency, will further boost non-oil revenues. The government should also explore progressive taxation models to ensure that the tax burden is equitably distributed.
Promote Export Diversification: The government should intensify efforts to promote non-oil exports through targeted incentives, such as export grants and access to international markets. Strengthening the Nigerian Export Promotion Council (NEPC) and providing training for exporters will enhance Nigeria’s competitiveness in global markets.
Foster Digital Innovation: The digital economy offers significant opportunities for revenue generation. The government should support the growth of the tech sector by investing in digital infrastructure, promoting fintech innovation, and creating a regulatory environment that encourages investment. Taxing digital transactions, while ensuring affordability for consumers, will further boost non-oil revenues.
Enhance Fiscal Transparency: To address revenue leakages and build public trust, the government should strengthen fiscal transparency and accountability. Regular audits of revenue agencies, public disclosure of revenue data, and anti-corruption measures will ensure that collected revenues are effectively utilized for public goods.
The Broader Economic and Social Impact
The surge in non-oil revenues has far-reaching implications for Nigeria’s economy and society. Economically, it strengthens the government’s ability to finance critical sectors such as education, healthcare, and infrastructure, which are essential for human capital development and inclusive growth. Socially, the growth in non-oil sectors, particularly agriculture and SMEs, creates opportunities for job creation and poverty reduction, addressing Nigeria’s high unemployment rate and income inequality.
Moreover, the shift toward non-oil revenues aligns with global trends toward sustainable development. As the world transitions to cleaner energy sources, Nigeria’s investment in non-oil sectors positions it to adapt to changing global economic realities. By leveraging its abundant natural resources, such as arable land and solid minerals, and its vibrant human capital, Nigeria can build a more resilient and diversified economy.
Conclusion: A Bright Future for Nigeria’s Economy
The 40.5% surge in non-oil revenues to ₦20.59 trillion in 2024 marks a turning point in Nigeria’s economic trajectory. It reflects the success of deliberate policies, structural reforms, and the resilience of non-oil sectors in driving fiscal growth. While challenges remain, the achievement signals a promising shift toward a more diversified and sustainable economy.
As Nigeria continues to navigate a complex global and domestic economic landscape, sustaining this momentum will require strategic investments, policy consistency, and a commitment to addressing structural challenges. By building on the gains of 2024, Nigeria can cement its position as a leading diversified economy in Africa, capable of delivering prosperity to its citizens and contributing to regional and global economic stability.
The journey toward economic diversification is far from complete, but the 2024 non-oil revenue performance offers a beacon of hope. With the right policies and sustained effort, Nigeria has the potential to transform its economy, reduce its reliance on oil, and create a brighter future for generations to come.
About the Author
