Nigeria is looking to double down on its revenue generation and reduce its exposure to borrowing as the West African nation continues to consolidate its fiscal reforms programme.
Wale Edun, Nigeria’s minister of Finance said the country will rather focus on improving its revenue streams than reliance on borrowing to finance its economy, even though it can access the international bond markets.
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“The issue now is to focus on revenue, focus on domestic resource mobilisation,” Edun, who doubles as the coordinating minister of the economy, said in an interview on Tuesday on the sidelines of the World Economic Forum in Davos. “We’re hoping to rely less on borrowing.”
Nigerian authorities rolled out some major reforms about three years ago which have helped boost the country’s fiscal position. The policies saw the government collect N28 trillion in taxes in 2025.
That’s 30 percent more than targeted, according to Zaccheus Adedeji, head of the Federal Inland Revenue Service. Oil revenue rose 21 percent to N6.8 trillion from the year before, while non-oil revenue grew 33 percent to N21.5 trillion.
In 2026, Africa’s biggest oil exporter is taking bold steps in widening its revenue base, including implementing the controversial tax reforms which seeks to curb leakages, ensure compliance and increase tax as a share of the economy to 18 percent in the next two years.
The potential improvement in revenues is expected to help offset the widening deficit in its budget this year. Africa’s most populous economy earmarked more than a quarter of its about N58 trillion budget to go toward interest payments, while muted oil income is forecast to keep revenues near N34 trillion naira.
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That translates to a budget deficit of roughly N24 trillion, or about 4.3 percent of gross domestic product, wider than last year’s estimated shortfall.
The government is nonetheless getting upgrades from international credit rating agencies. Last November, S&P Global Ratings revised its outlook on Nigeria to “positive” from “stable”, backing the country’s ongoing economic reforms, and also affirmed the country’s rating at “B-/B”.
In May Moody’s upgraded Nigeria’s rating by one notch to “B3” from “Caa1”, citing notable improvements in the country’s external and fiscal positions, while Fitch in April kept its “B” rating and “stable” outlook.
Those re-ratings boosted investor confidence and saw Nigeria’s double-tranche 10-year and 20-year $2.3 billion Eurobond issuance oversubscribe by 400 percent and represents a significant re-entry into the international capital markets.
