Africa Sovereign Credit has forecasted that Nigeria’s GDP growth will accelerate to 3.8% year-on-year in 2025, up from 3.4% in 2024, propelled by tax reforms and the service sector.
The expected growth will be underpinned by stronger contributions from the services and industrial sectors, alongside informal sector activities captured following the rebasing of the country’s GDP.
The National Bureau of Statistics (NBS) reported that Nigeria’s economy expanded by 3.84% in real terms during the fourth quarter of 2024.
This marked an improvement compared to the 3.46% growth recorded in the corresponding period of 2023, as well as the previous quarter’s performance. The services sector was the standout contributor, growing by 5.37% and accounting for 57.38% of Nigeria’s GDP.
Africa Sovereign Credit also projects a significant improvement in the country’s current account surplus, which is expected to reach 5% of GDP in 2025, compared to an estimated 1% in 2024. “This is because of an expected surge in Nigeria’s trade surplus,” the forecast noted.
Fiscal deficit anticipated to narrow
Additionally, the fiscal deficit is anticipated to narrow from 5.2% of GDP in 2024 to 4.3% in 2025. The forecast suggests the deficit could shrink further if the proposed tax reform bills are successfully implemented.
These reforms include the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill.
“If approved, a more equitable and fair tax administration system and improved collection efficiency is expected,” the forecast highlighted.
In February, the Senate conducted a two-day public hearing at the National Assembly to deliberate on these proposed tax reforms.
What you should know
The event brought together key stakeholders, including Minister of Finance and Coordinating Minister of the Economy Wale Edun, Federal Inland Revenue Service (FIRS) Chairman Zacch Adedeji, and Nigerian National Petroleum Company Limited (NNPCL) Group CEO Mele Kyari. Other participants included members of the Federal Executive Council, heads of relevant agencies, and the Comptroller General of Customs, Adewale Adeniyi.
- The tax reform bills, submitted to the National Assembly by President Bola Tinubu, underwent extensive consultations over five months before being passed for a second reading in the House of Representatives.
- These bills aim to restructure Nigeria’s tax system, enhancing transparency, efficiency, and revenue collection.
During deliberations, legislators emphasized the importance of harmonizing tax administration, eliminating multiple taxation, and creating a structured framework for resolving tax disputes. The bills also propose establishing an ombudsman system to streamline the resolution of tax-related conflicts between taxpayers and government agencies.
