According to the CBN’s latest quar­terly economic report, gross federally collected revenue climbed 15 percent quarter-on-quarter to N8.3 trillion in Q2 2025. On a year-on-year basis, the increase was even stronger at 30 percent, reflecting the impact of improved tax administra­tion, recovering corporate earnings, and modest gains in oil receipts.

 Yet, despite the impressive up­tick, total revenue for the quarter amounted to just 43 percent of the pro-rata quarterly budget target of N19.5 trillion—a shortfall an­alysts say underscores Nigeria’s persistent structural revenue weakness.

Cumulatively, gross collec­tions into the Federation Account for the first half of the year to­talled N15.6 trillion, representing a robust 37 percent year-on-year increase. After mandatory de­ductions and statutory transfers, however, the amount available for sharing among the federal, state, and local governments stood at N4.6 trillion.

Non-Oil Revenue Leads The Pack, But Still Misses Target

Non-oil revenue once again underscored its growing impor­tance in Nigeria’s fiscal frame­work, contributing N5.1 trillion, or 61 percent, of total Q2 revenue. This marked an eight percent in­crease from the previous quarter.

However, like the broader rev­enue picture, non-oil receipts un­derperformed relative to budget expectations, falling considerably short of the quarterly target of N8.1 trillion.

A breakdown of non-oil rev­enue shows modest but uneven performance across key catego­ries:

Value Added Tax (VAT) col­lections slipped three percent quarter-on-quarter to N2.0 tril­lion, though the figure slightly surpassed the quarterly budget benchmark of N1.9 trillion.

Companies Income Tax (CIT) performed strongly, rising by 35 percent to N1.7 trillion, driven by improved profitability in sectors such as telecommunications, banking, and consumer goods. Yet CIT revenue was still 29 per­cent below the pro-rata quarterly target of N2.3 trillion, reflecting structural challenges, compliance gaps, and weaker-than-expected earnings in oil-dependent and import-reliant sectors.

Customs and excise duties increased by four percent to N1.0 trillion, supported by tighter bor­der controls and stronger import documentation. Even so, the col­lections remained significantly below the N1.5 trillion projected in the budget.

Other non-oil inflows com­prised N282 billion in indepen­dent revenue from the Federal Government and an additional N104 billion from various small­er sources.

The overall performance high­lights both the gains achieved through ongoing revenue mobili­sation reforms and the substantial gap that must still be bridged if the Federal Government is to re­duce dependence on borrowing.

Oil Revenue Improves But Remains Well Below Target

Oil revenue, traditionally Ni­geria’s fiscal backbone, delivered an encouraging 29 percent quar­ter-on-quarter increase to N3.2 trillion in Q2 2025. This improve­ment reflected firmer receipts from crude exports and higher average prices in the early part of the quarter.

However, the performance was still far below the quarterly budget target of N11.5 trillion, un­derscoring the impact of produc­tion challenges, theft, vandalism, and delayed investment.

The major drag came from lower-than-expected oil produc­tion, which averaged 1.66 mil­lion barrels per day (including condensates)—well short of the 2.05 million barrels per day as­sumption underpinning the 2025 budget.

An oil economist, Johnson Anogba, noted that the gap be­tween actual output and budget assumptions remains one of the most significant threats to fiscal stability.

According to him, “Even when prices are favourable, Nige­ria simply isn’t producing enough crude to meet its revenue goals. Until production consistently stays above 1.8 million barrels per day, revenue will keep falling below target.”

Persistent security challeng­es in the Niger Delta, aging in­frastructure, and delays in new projects have all contributed to Nigeria’s inability to ramp up production.

The underperformance con­tinues to pressure government finances, exchange rate stability, and external reserves.

A Mixed Outlook: Fiscal Reforms Offer Hope, Oil Market Risks Loom

Looking ahead, analysts expect a notable boost in gov­ernment revenue heading into 2026, supported by ongoing fiscal reforms by the current adminis­tration.

Key reform pillars include enhanced tax compliance, digital revenue monitoring, better align­ment of MDAs with the Treasury Single Account, and improved performance of revenue-gener­ating agencies such as FIRS and Customs.

Additionally, recent efforts to tighten the net around tax eva­sion, broaden the tax base, and strengthen collection efficiency are beginning to show early signs of promise.

However, risks remain. A po­tential decline in global oil prices next year—driven by oversupply concerns and weaker demand forecasts—poses a significant threat to Nigeria’s oil receipts. Crude oil prices have shown vol­atility in recent months, and in­ternational agencies predict only moderate price support through 2026.

Yet there is a silver lining: Ni­geria is expected to record high­er crude oil production volumes next year, supported by improved security interventions, upstream investments, and the gradual resolution of operational bottle­necks.

“Higher volumes may off­set price weakness,” said a La­gos-based energy analyst. “If production can edge closer to 1.9 or 2.0 million barrels per day, we could see a more balanced reve­nue picture by late 2026.”

Can Nigeria Close The Gap?

The CBN’s report paints a picture of progress, but one still overshadowed by substantial gaps relative to the Federal Gov­ernment’s fiscal ambitions.

The strong year-on-year growth in revenue underscores ongoing improvements in ad­ministration and compliance. But the wide gulf between actual receipts and budget benchmarks highlights a deeper reality: Nige­ria’s revenue challenges remain structural, not seasonal.

Until oil production rises steadily, non-oil collections meet projected targets, and compli­ance improves across the board, the Federal Government may continue to struggle with large fiscal shortfalls, rising borrow­ing needs, and delayed project execution.

For now, policymakers face a difficult balancing act—boosting revenue in a fragile economic en­vironment while implementing difficult reforms needed to stabi­lise the country’s finances.

What remains clear is that the coming months will be critical. Revenue must rise, reforms must accelerate, and production must improve if Nigeria is to meet its fiscal obligations and chart a more sustainable economic path.