Beyond tax, tariffs and loans: Strategies for generating revenue for Nigeria
By Anthony Kila
There is a fundamental yet simple equation that individuals and governments across all nations, including Nigeria, must confront and effectively address. On one side of this equation, people require a range of essential services to ensure their well-being and development, such as internal security, defence, education, healthcare, and transportation infrastructure like roads and railways, among others. On the other side, governments need substantial financial resources or revenue streams to adequately fund and deliver these vital services, thereby fulfilling their fundamental responsibilities.
To solve this equation, discussions regarding Nigeria’s government revenue have been confined to a limited focus on tariffs, taxes, and borrowing. While these conventional methods are undeniably significant, they have often proven to be inadequate and, in some cases, counterproductive in the effort to develop a resilient and inclusive economy. My view is that Nigeria requires a more innovative, strategic, and sustainable approach to revenue generation: an approach that capitalises on the country’s unique strengths and confronts its ongoing inefficiencies. Such an approach should involve diversifying revenue sources, implementing forward-thinking policies, and harnessing technological advancements to create a more robust and equitable economic framework.
With a population exceeding 200 million, abundant natural and human resources, and a strategic geopolitical position, it is vital to develop and implement long-term, structural strategies for sustainable revenue generation. Today, I invite us to explore a comprehensive, multi-faceted approach that goes beyond merely increasing tariffs or borrowing; one that emphasises efficiency, innovation, and inclusivity. This approach aims to foster economic resilience and ensure more equitable growth for all Nigerians. To clarify, I continue to believe that human capital is Nigeria’s most valuable resource, not its natural resources, and that both need to be better harnessed.
A good starting point for developing a new economic strategy to generate revenue for Nigeria is to better understand the informal economy, with the goal of formalising it. Nigeria’s informal sector presents a fascinating paradox: it is one of the largest employers in the country, yet it contributes minimally to public revenue. The sector makes up over 60% of the economy, but its contribution to public revenue is disproportionately low. If we follow the common mindset of our fiscal and public economic managers, the instinct would be to tax that sector more. However, that approach would be misguided. Instead of punitive taxation, the government should offer incentives for registration, such as stimulating access to microloans or basic social services.
It will also help to facilitate and reward digital platforms and record-keeping tools for artisans, traders, and informal service providers. Since tax, we must, the best option is to introduce low-tier, simplified tax regimes for small operators. The most obvious benefits of this approach include, but it is not limited to, having a wider tax net without increasing rates, social inclusion, and greater economic data for planning.
A comprehensive reassessment of the utilisation of public assets is a vital and strategic step that Nigeria must undertake. Currently, the country has thousands of idle or underused public assets, including a variety of properties such as buildings, estates, and disused factories. It is crucial to establish a well-structured Public Asset Monetisation Programme (PAMP) dedicated to effectively managing the leasing of non-essential infrastructure to private sector operators who can optimise their use. This approach will allow us to rehabilitate abandoned facilities and turn them into revenue-generating enterprises.
Additionally, it is important to auction obsolete items to recover value and promote efficient resource use. This collective effort will not only optimise current assets but also stimulate economic growth and generate much-needed revenue for national development, with proceeds reinvested transparently. It is clear how this will lead to immediate revenue injection, reduced maintenance burdens, and, importantly, the creation of jobs and wealth.
We need to revitalise and redefine the relationship with the Nigerian diaspora, recognising it as a vital source of national development, funded by patriotic citizens rather than foreign banks. The Nigerian diaspora sends over $20 billion annually in remittances, a significant flow of foreign exchange. Currently, much of this valuable forex is used for personal consumption and supporting families. However, the government should consider establishing strategic civic investment schemes and introducing diaspora bonds to leverage these funds more effectively.
For instance, it is both advisable and feasible to issue Diaspora Development Bonds targeted at specific projects such as healthcare and power infrastructure. Additionally, the creation of state-level investment platforms in foreign currency, offering guaranteed yields and transparency, could foster greater diaspora participation. To ensure trust and accountability, these initiatives would require external auditing and the implementation of digital monitoring dashboards, enhancing transparency and investor confidence.
Beyond the utilisation of oil and mineral resources, it is imperative that we invest in and comprehensively harness culture and education as valuable export commodities capable of generating substantial revenue for both the private and public sectors. Nigeria is endowed with a rich tapestry of cultural heritage, knowledge, and creative energy that remains largely untapped. By formulating and implementing a clear strategic framework, we can transform these assets into globally competitive and profitable export industries.
Greater efforts are required to actively promote Nollywood, Nigerian music, and fashion as official economic sectors on the international stage. Additionally, initiatives should be undertaken to internationalise Nigerian universities through strategic partnerships and the expansion of remote learning programmes. If effectively managed, the culture and education sectors have the potential to become significant sources of foreign exchange, employment, and national branding. With deliberate and focused management, these sectors can greatly contribute to Nigeria’s economic diversification and international reputation.
It is now imperative that we shift our focus away from merely exporting raw resources. Instead, we must reform our resource royalty systems and actively promote local value addition. This involves establishing industrial clusters centred around natural resources, supported by incentives such as tax holidays and other benefits aimed at processors rather than extractors. Encouraging local refining, processing, and development of value chains for oil, minerals, and agricultural products is essential. Additionally, we need to renegotiate existing agreements within the extractive industries, aiming for higher royalties and stricter compliance terms. Such measures would generate more employment, increase the value of exports, and help retain wealth within the country.
There is no other way to put it; for a sustainable future, we need to go beyond taxes, tariffs, and loans. Nigeria’s future revenue should not rely solely on increased taxation, but on smarter taxation; not on endless borrowing, but on prudent development. The way forward requires a change in mindset: from dependence to productivity, from control to cooperation, from quick fixes to strategic planning. By utilising its people, assets, ideas, and values, Nigeria can finance its ambitions – not through panic and pressure, but through purpose and partnership. It is time for Nigeria to shift from a borrow-and-tariff mindset to a build-and-earn strategy. What is required is not merely technical expertise, but political will, transparency, and civic engagement. A new culture of governance—one that treats the economy as a partnership between government and citizens—must emerge if Nigeria is to unlock its full revenue potential.
Join me, @anthonykila, if you can, to continue these conversations.
- Anthony Kila is a Jean Monnet Professor of Strategy and Development at the Commonwealth Institute for Advanced and Professional Studies.
- EDITOR’S NOTE: This article which was first published on August 5, 2025, is being republished due to popular demand.
