Nigeria: Manufacturing’s VAT Contribution Surges to N1.17 Trillion in 2025
The manufacturing sector in Nigeria has shown significant growth in its contribution to tax revenue, with a recorded Value Added Tax (VAT) of N1.17 trillion in 2025. This figure represents a remarkable 45.61% increase from the N803.53 billion collected in 2024. Additionally, the sector’s Company Income Tax (CIT) contribution rose to N881.29 billion, marking a 32.83% increase from the previous year’s N663.46 billion.
Growth in Tax Contributions
The Lagos Chamber of Commerce and Industry (LCCI), represented by its president, Engineer Leye Kupoluyi, highlighted these developments during a recent State of the Nation address. The chamber emphasized that this year-on-year growth underscores the manufacturing sector’s expanding role in generating government revenue and fostering industrial development in Nigeria.
In light of these positive trends, the LCCI urged the Federal Government to enhance investments in productive infrastructure and implement economic policies that promote job creation, reduce production costs, and provide fiscal interventions. These measures are deemed essential for the sector to reach its full potential.
Challenges in Budget Execution
Despite the encouraging tax revenue figures, the LCCI expressed concerns regarding historical weaknesses in Nigeria’s budget execution capacity. Issues such as delays in fund releases, bureaucratic bottlenecks, and inefficiencies have been identified as critical challenges hindering economic growth.
The chamber pointed out that there is a rollover of ₦7.71 trillion in unimplemented capital projects for 2025, which calls for improved fiscal management. It advocates for effective public-private partnerships (PPPs) and stronger collaboration between the executive and legislative branches to ensure timely project completion.
The LCCI noted troubling moments during budget defense sessions at the National Assembly, where various Ministries, Departments, and Agencies (MDAs) reported receiving only a small fraction of the funds allocated for capital projects in the 2025 fiscal year. The chamber argued that when contractors are owed significant sums, their operations are compromised, jeopardizing jobs and economic stability.
Oil and Gas Sector Outlook
In its outlook on the oil and gas sector, the LCCI described the establishment of the Nigerian Upstream Petroleum Regulatory Commission as an ambitious reform initiative aimed at boosting crude oil production, restoring investor confidence, and positioning Nigeria as a competitive player in the global energy market.
To fully capitalize on the opportunities presented by rising crude oil prices, the chamber stressed the need for Nigeria to enhance its local production and refining capabilities, thereby establishing itself as an alternative oil supply hub in Africa.
Public Debt Concerns
While the debt-to-GDP ratio remains within acceptable limits, the LCCI called on the federal government to consider more realistic measures, such as the debt-to-service and debt-to-revenue ratios, which have reached concerning levels. The total public debt of Nigeria stands at N159.28 trillion, reflecting a year-on-year increase of N24.98 trillion, or 18.6%, from N134.30 trillion in December 2024. This increase is attributed to new borrowings aimed at financing fiscal gaps and the impact of exchange rate depreciation on external debt obligations.
The advocacy group cautioned that while an anticipated oil windfall in 2026 may provide a temporary buffer, its benefits could be limited if not strategically managed, as previous oil revenue surges have not consistently translated into sustained fiscal improvements.
Telecommunications Sector Challenges
The LCCI also addressed rising incidents of vandalism affecting telecommunications infrastructure across Nigeria, describing these acts as threats to economic productivity, investor confidence, national security, and digital inclusion. Telecommunications infrastructure is vital for modern economic activities, supporting sectors such as banking, e-commerce, education, healthcare, and logistics.
The chamber noted that persistent attacks on fiber-optic cables, base stations, and related assets disrupt essential services, increase operational costs for service providers, and diminish service quality for consumers and businesses.
To combat these challenges, the LCCI urged all levels of government to treat telecommunications infrastructure as critical national assets requiring enhanced security measures, stricter enforcement of anti-vandalism laws, and improved collaboration among security agencies, regulators, and network operators.
Power Supply and Business Competitiveness
The LCCI highlighted that the poor state of electricity supply remains one of the most significant barriers to business operations in Nigeria. Frequent outages, high generator costs, and unreliable distribution networks continue to hinder productivity and inflate the cost of doing business.
In response, the chamber called for urgent reforms in the power sector, advocating for accelerated investment in renewable energy, improved grid management, and increased private-sector participation to enhance efficiency and reliability.
Source: www.zawya.com
Read all the latest developments and breaking updates in the Latest News section.
Published on 2026-05-12 13:35:00 • By the Editorial Desk
