Nigeria's VAT revenue shows over ₦1.1T increase in 2023 while the value in dollars shows a decline

Key takeaways:

  • VAT revenue in naira has consistently grown over the years, hitting an all-time high of ₦3.64 trillion in 2023.
  • The dollar value of VAT revenue declined despite the increase in naira terms, dropping from $5.88 billion in 2022 to $5.44 billion in 2023.
  • Over the last decade, VAT revenue in naira has grown at an impressive CAGR of 20.18%, while its dollar value grew at a much lower 5.48%, showing the impact of currency devaluation.
  • 2023 saw one of the largest year-on-year increases in VAT revenue in naira, but the corresponding drop in dollar value indicates that exchange rate volatility are eroding real revenue gains.
  • Nigeria’s revenue collection efforts are improving, but the decline in dollar value highlights the need for economic stability and currency strength.
  • This trend reflects a broader issue in Nigeria’s economy - higher local earnings do not necessarily translate into increased global purchasing power.
  • With VAT being a major non-oil revenue source, policymakers must focus on stabilizing the exchange rate to maximize the real impact of revenue growth.

Nigeria’s VAT revenue surged to ₦3.64 trillion in 2023, reflecting over ₦1.1 trillion increase from the previous year. However, despite this impressive growth in local currency terms, the dollar value of VAT revenue actually declined, dropping from $5.88 billion in 2022 to $5.44 billion in 2023. This divergence highlights the impact of exchange rate fluctuations on Nigeria’s fiscal earnings.
A steady increase in VAT collection over the past decade signals improved revenue mobilization efforts, but the real purchasing power of these earnings is eroding in the face of currency depreciation. The contrast between the naira and dollar trends exposes the underlying economic reality, growth in nominal figures doesn’t always translate to real gains in global terms.

Source:

National Bureau of Statistics (NBS)

Period:

2013 - 2023
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