By – Soji Adeleye, CEO, Alfe City Institution
As Nigeria’s government intensifies its push to improve revenue collection, the strategy—on the surface—appears economically sound. After all, a country must generate income to fund public services, repay debts, and invest in development. But beneath this fiscal ambition lies a troubling contradiction: the aggressive pursuit of revenue in an economy plagued by low productivity, rising debt, and stagnant infrastructure is not just unsustainable—it’s counterproductive.
The Revenue Trap
The 2025 budget sets a record-breaking revenue target of ₦36.35 trillion, a 123% increase from ₦18.32 trillion in 2024. This is matched by a nearly 98% surge in debt servicing costs, now projected at ₦16.3 trillion—almost half of the entire budget. In effect, Nigeria is spending more on interest payments than on healthcare, education, and infrastructure combined.
Despite these figures, the government continues to rely on tax expansion and foreign investment to meet its targets. Yet, Nigeria’s history of missed revenue goals and a weak tax base casts doubt on the feasibility of this plan.
Where Is the Growth?
Infrastructure spending has increased to ₦5.99 trillion in 2025, up from ₦1.32 trillion in 2024—a 350% jump. Major projects like the Lagos-Calabar Coastal Highway and Sokoto-Badagry Superhighway are expected to boost trade and create jobs. However, experts warn that without proper implementation, these allocations may not translate into real improvements.
Meanwhile, allocations to education and health have declined as a share of the budget. Education dropped from 8.21% in 2024 to 7.08% in 2025, and health from 5.15% to 4.99%. This shift away from human capital development undermines long-term productivity and inclusive growth.
A Better Path Forward
Nigeria needs a paradigm shift. Instead of taxing a stagnant economy, the government should incentivize its revival: a maximalist interpretation of the Nigerian Blue Economy – expanding the conversation beyond marine subsectors to include dealing with the country’s transportation infrastructural deficit, low productivity, unemployment, limited centers of economic growth, energy, logistics, climate resilience, innovation, national security and sustainable development.
With the Nigerian GDP hovering around $350 and $450 billion in the last few years for a population of over two hundred and twenty million projected to become the third largest in the world in a short while:- the country should build TEN ultra modern new ports along the Nigeria Atlantic Coast as new centers of economic growth with close industrial clusters, SEZs and technology hubs – new cities. Even a 20–25% increase in current port throughput, combined with sectoral diversification, could ripple across GDP metrics. The multiplier effect in jobs, income, and investment could be huge if governance and policy coherence align.
Rationale:
– Nigeria has a 853 km coastline, underutilized for national productivity.
– Existing ports are overburdened; regional competitors have outpaced Nigeria in maritime logistics.
– Ten new ports would dramatically increase Nigeria’s cargo handling capacity. This could:
– Attract regional transshipment business currently going to hubs like Lomé and Tema.
– Enable exports of value-added goods (not just raw commodities) via efficient logistics.
– Create jobs in port operations, logistics, customs, and maritime services.
– The African Continental Free Trade Area (AfCFTA) unlocks regional demand that Nigeria must meet or risk marginalization.
– Tax holidays for startups and SMEs could unlock private capital and stimulate job creation.
– Performance-based incentives tied to employment, local sourcing, and innovation would reward businesses that contribute to national development.
– Public-private partnerships (PPPs) in transport, energy, and digital infrastructure could catalyze productivity gains that make future revenue collection both easier and more equitable.
Conclusion: Growth First, Then Revenue
Nigeria’s fiscal strategy must be rooted in economic reality. Without productivity, revenue targets are hollow. Without infrastructure, taxation is punitive. And without incentives, growth will remain elusive.
The government must reverse the order of its priorities: create new centers of economic growth – build the economy first, and the revenue will follow.
