Rising Revenues: CPPE Seeks Efficient Spending by FG, States, LGs

Cautions against activation of  5% fuel levy for road maintenance

Dike Onwuamaeze 

Following increasing government revenues as a result of ongoing fiscal reforms, the Centre for the Promotion of Private Enterprise (CPPE), has advised all tiers of governments to focus on enhancing spending efficiency and aligning fiscal outcomes with real economic performance.

The Chief Executive Officer of CPPE, Dr. Muda Yusuf, gave this advice yesterday in a policy brief titled “Nigeria’s Fiscal and Tax Reforms”,  advising that the country’s fiscal and tax reforms have delivered important progress in expanding revenue and improving fiscal sustainability. 

“The next phase must focus on deepening revenue diversification, enhancing spending efficiency, and aligning fiscal outcomes with real economic performance,” he advised.

Yusuf said that with prudent management, stakeholder collaboration, and social sensitivity, these reforms can lay a solid foundation for a more resilient, productive, and inclusive Nigerian economy.

According to him, Nigeria is undergoing a major fiscal transition aimed at strengthening revenue mobilisation, fiscal sustainability, and economic resilience. 

He said: “Two landmark policy measures — the removal of fuel subsidy and the unification of exchange rates — have significantly boosted government revenues, expanded fiscal space, and improved the capacity for public investment.

“Collections from Value Added Tax (VAT) and Company Income Tax (CIT) have also increased, reflecting stronger compliance and a gradual recovery in economic activities. Sub-national governments are reporting higher revenues and increased allocations to agriculture, infrastructure, and social development.”

Yusuf, however, cautioned that rising inflation and currency depreciation have moderated the real value of these gains, underscoring the need for prudent fiscal management and realistic expectations.

He said: “Recent reforms have driven strong nominal revenue growth as fuel subsidy removal has freed trillions of Naira in fiscal resources while exchange rate unification has boosted Naira-denominated oil revenues.

“Also, VAT and Company Income Tax collections have improved through enhanced compliance and enforcement. Despite these advances, the real fiscal impact is tempered by high inflation and exchange rate pressures. It is, therefore, important to assess fiscal outcomes in both nominal and real terms to maintain credible expectations and policy balance.”

Yusuf added that a comparison of 2025 of national budgets of African countries in the U.S. Dollar terms would highlight Nigeria’s fiscal limitations, explaining that for instance, Nigeria has a budget of $36.7 billion compared to South Africa’s $141 billion; Algeria’s $126 billion; Egypt’s $91 billion and Morocco’s $73 billion.

He said that despite the country’s large economy and population, Nigeria’s budget has remained relatively small. 

“This limits fiscal capacity for transformative investments in infrastructure, human capital, and social welfare. The situation underscores the urgency of revenue diversification, public-private partnerships, and enhanced non-tax revenue mobilisation,” he said.

With limited fiscal space,  Yusuf advised that priority areas should include infrastructure spending on roads, power, ports, and digital infrastructure to reduce business costs and improve competitiveness. He also recommended targeted support for manufacturing, MSMEs, and technology-driven enterprises to boost productivity.

Other areas of priority spending, according to him, are food security, security and human capital development. He said that governments at all levels should minimise waste, link spending to measurable outcomes, and comply strictly with fiscal responsibility benchmarks.

The CPPE also noted that the recent tax measures have introduced several positive features such as reliefs for producers and priority sectors; higher exemption thresholds for low-income earners and small businesses as well as zero-rated VAT on essential goods such as food, pharmaceuticals, and educational materials.

“However, private sector concerns remain over compliance costs, the increase in capital gains tax from 10 per cent to 30 per cent and possible welfare implications of personal income tax changes. Effective implementation should be guided by stakeholder consultation, flexibility, and evidence-based adjustments,” Yusuf said.

He also advised that the activation of long-standing 5 per cent fuel levy for road maintenance, legislated since 2007 should consider economic conditions, timing, and social welfare implications to ensure broad acceptance and minimal disruption.

The CPPE also told the government to measure fiscal gains realistically by  adjusting fiscal assessments for inflation and exchange rate effects and communicating outcomes transparently.

It also said that the government should implement tax reforms with flexibility by maintaining continuous dialogue with stakeholders and refine policies as needed.