Beyond Nominal Value Headline: Why Bigger Revenues Won’t Buy Nigeria a Bigger Economy
By Victoria Hauwa Jatto
Nigeria’s public finances have never seen anything like the last three years. According to revenue and disbursement data published by the Office of the Accountant-General of the Federation (OAGF), the Federation Account earned ₦88.91 trillion between 2023 and 2025, more than three times the ₦29.07 trillion of the preceding four years. Nigeria Revenue Service records show company income tax rose 315 per cent in three years, while VAT rose 283 per cent. OAGF disbursement figures show states and local governments shared ₦29.04 trillion, which is more than they received in the entire previous administration, delivered in one year less. By 2025, monthly disbursements to the three tiers of government were exceeding ₦1 trillion in some months. By any nominal measure, this is a revenue revolution.
To understand what this windfall must achieve, it helps to recall where Nigeria stood before the reforms began. When the National Bureau of Statistics rebased the national accounts in 2014, Nigeria emerged as Africa’s largest economy, with a GDP of US$510 billion, ahead of South Africa and every other economy on the continent. That crown was worn for nearly a decade. In the five years before exchange rate unification, Nigeria still ranked first in Africa at the official exchange rate, with a dollar GDP, on IMF data, of roughly US$421 billion in 2018 rising to about US$477 billion in 2022. On paper, the giant remained the giant.
The nominal ranking, however, was doing a great deal of the work. Beneath the headline, the economy spent those years treading water. Real growth ran below population growth, so average incomes were quietly falling. Petrol subsidies absorbed about ₦10 trillion annually. Most importantly, the number one ranking rested on an administered exchange rate defended by rationing dollars. Nigeria was Africa’s largest economy at a price at which dollars could not actually be bought. The ranking was real on paper and increasingly artificial in substance.
Exchange rate unification in June 2023 ended the pretence. As the naira found its market level, Nigeria’s GDP in dollar terms fell from $477 billion in 2022 to roughly $253 billion in 2024. The IMF’s April 2024 rankings told the story: South Africa first, Egypt second, Algeria third, and Nigeria fourth. Yet the fall measured currency honesty, not economic collapse. What the devaluation did was reveal the economy’s true dollar size, which the NBS 2025 rebasing then refined to ₦372.8 trillion, approximately $243 billion. This is the honest baseline from which the one-trillion-dollar ambition must now be judged. It is not a modest step up from an inflated number one position. It is a climb from fourth place that requires the economy to roughly quadruple by 2030, an extraordinarily ambitious target by any measure.
This history explains why nominal measures are precisely the trap. A large share of the recent revenue surge is translational: the same barrel of oil now earns three times as much naira after unification, and remittances that once vanished into subsidy deductions now arrive at the Federation Account. Money recounted is not wealth created, just as the old number one ranking was position held rather than prosperity earned. The uncomfortable truth is that revenue, by itself, contributes nothing to the trillion-dollar target. Economies are not measured by what their governments collect but by what their people produce, and public revenue matters only through what it is spent on.
What role, then, does the revenue surge play in the journey from $243 billion to $1 trillion? Three clear ones. First, financing. The ₦88.91 trillion earned by the Federation Account between 2023 and 2025 pays for the physical and human capital investments that earlier governments could not afford, because fuel subsidies and the artificial exchange rate had swallowed the fiscal space. Second, credibility. A Federation Account that has delivered ₦88.91 trillion in three years with the majority now coming from non-oil sources, signals to markets, rating agencies and investors that the fiscal foundation under the naira is solid. Currency stability matters here. The target is measured in dollars, and every sharp depreciation directly reduces the economy’s dollar size.
Third, insurance. Non-oil revenue already accounts for 57.6 per cent of Federation accruals. Every further 10 per cent improvement in company income tax and VAT collection is worth roughly ₦3.2 trillion a year. This broader base can keep funding the investment programme even if oil prices fall. The revenue wave is not the destination. It is the bridge, the balance sheet and the shock absorber that allows the real economy to do the growing. That returns us to the central question: what exactly should the money buy?
The answer is not a long list, but a short set of constraints that, if removed, would lift the entire economy. It begins with power. No single line of public spending would add more to Nigerian output than electricity that works. We have installed capacity of about 13,000 megawatts but deliver only a fraction through a fragile grid. So, factories, banks, hospitals and markets became their own power companies, running on diesel and petrol at several times the cost of the grid. That is a hidden tax on everything we produce, and a major reason our manufacturing cannot compete. Completing the transmission backbone, closing the metering gap, settling the debts paralysing generation companies, and extending the grid with solar mini grids would turn every reliable megawatt into a subsidy that creates output, jobs and taxes. If the trillion-dollar economy has one physical prerequisite, it is measured in gigawatts.
From power, the next constraint is logistics. Nigerian goods pay twice for distance, once on roads that stretch every journey, and again in ports where clearing cargo takes weeks instead of hours. The result is that food rots between farm and market, and manufacturers pay a premium to move cement, fuel and containers across the country. Lekki Deep Seaport has shown what modern infrastructure looks like. We must now multiply it by automating legacy ports, completing the priority road corridors that carry the bulk of national freight, and extending rail for bulk cargo. But we must also fix the last mile: rural feeder roads that connect farms to markets, cold storage to cut post-harvest loss, and urban freight corridors that move goods inside our cities. With AfCFTA opening a market of more than a billion people, tariff-free access means nothing if goods cannot reach a port affordably. And domestically, lower logistics cost means cheaper food on every Nigerian table. Logistics, in this sense, is export policy, industrial policy, and food policy all compressed into one.
The third lever is gas, the bridge we already own. Nigeria holds Africa’s largest reserves and still flares part of them. Completing the domestic gas backbone, from pipelines like Ajaokuta-Kaduna-Kano to processing plants and gas-fired power, converts waste into three assets: fuel for power, feedstock for industry, and dollar-earning LNG. Unlike oil, where the recent surge is mostly a currency effect, gas monetisation is genuinely new output. It is also our hedge. If oil falls to $50-$60, Federation revenues drop by a quarter to a third. The insurance is not hope, but molecules of a different kind.
Then comes agriculture, the sector where the poor and the price level meet. Agriculture employs more than half of poor Nigerians and remains the economy’s productivity laggard, which is why food inflation near 40 percent in 2024 was both a welfare catastrophe and a macroeconomic one.
The spending that changes this is known and unglamorous. Irrigation would allow farming to happen more than once a year on more than a sliver of arable land. Rural feeder roads would let produce reach markets before it rots. Storage and processing capacity would rescue the substantial share of perishable harvests currently lost between farm and table, and extension services with functioning input systems would raise yields toward regional benchmarks. Every naira spent here works three times over: it raises rural incomes where poverty concentrates, it lowers the food prices that dominate the consumption basket of every Nigerian household, and it feeds the agro processing industry that should be the first rung of Nigeria’s manufacturing ladder. A trillion-dollar economy with today’s agricultural productivity is arithmetically possible but socially unimaginable.
Layered on top is the digital economy. Services now constitute 55.5 per cent of Nigerian output, and the fastest growing layers of it, including fintech, e-commerce, software and the creative industries, were substantially invisible to the old statistics. This is the sector where Nigerian comparative advantage is already proven and where the required public investment is comparatively cheap: fibre backbone to close the broadband gap between Lagos and everywhere else, digital public infrastructure built on the National Identification Number for payments and service delivery, reliable power for data centres, and above all digital skills at scale.
Beneath all of this is human capital. The World Bank’s April 2026 Nigeria Development Update carries a pointed subtitle, ‘The Case for Early Childhood Development’, and it is a reminder that the 2030 workforce are already in primary school while millions of Nigerian children are not, that many who are enrolled learn far too little, and that childhood malnutrition quietly caps the cognitive potential of a generation. No infrastructure programme survives with an unskilled and unhealthy workforce. The best use of the ₦11.45 trillion going to local governments is making primary health centres work. Pair that with deliberate investment in education across all levels; from foundational literacy and numeracy right through to the skills the economy needs. The spending here is the least glamorous and the highest yielding on any honest accounting.
Running through all of these is the enabler that multiplies every other return, which is security. Better pipeline security has already raised oil output from 1.2 million to 1.5–1.6 million barrels a day, adding trillions of naira yearly to the Federation Account. The same constraint holds across the economy: farmers cut off from their fields, transporters paying protection money, and investors pricing in kidnap risk all produce far below capacity. No tax reform can solve that. Security spending that restores output for farms, transport corridors or energy assets should be judged like infrastructure, by the production it frees.
India shows how trillion-dollar economies are built. It crossed one trillion dollars in 2007 and reached roughly four trillion dollars by 2025 without an oil windfall. For most of that period it imported the very commodity Nigeria exports. Its rise was a sustained spending story: the Golden Quadrilateral highways that linked its industrial regions, years of investment held near or above 30 per cent of GDP, a telecoms rollout that put phones then smartphones and digital public infrastructure into a billion hands, and the steady construction of a stronger tax base that culminated in the 2017 Goods and Services Tax (GST), a single nationwide tax that replaced a tangle of older levies. Sector by sector, India spent against its binding constraints for two decades. The milestone arrived as a by-product. There is no excuse for lower ambition or slower delivery. The same disciplined focus on removing constraints is required now.
The trillion-dollar economy will be mostly privately led. The windfall’s job is to make private capital’s arithmetic work. How the money is spent matters as much as where it goes. Public resources must be directed exclusively into the sectors that expand real output: power, logistics, gas, agriculture, digital infrastructure, human capital and security. These are the binding constraints that keep every producer in the economy below capacity, and the evidence from successful large economies shows that sustained investment against precisely these constraints is what delivers lasting growth.
A spending agenda is defined as much by its refusals as by its commitments.
Foremost among them is the refusal of recurrent absorption. Nigerian governments have historically consumed 70 to 80 percent of revenue on salaries, overheads and debt service. If the additional ₦12 trillion now reaching states and local governments follows the same path, it will vanish without leaving any economic trace. Next comes the refusal of prestige capital, the airports without airlines and conference centres without conferences that swallowed previous windfalls. Every project must pass one simple test: does this asset expand real output, or does it merely decorate the landscape for political applause in an election season? The government must equally refuse the quiet return of hidden or undeclared subsidies, those off budget supports that are never openly acknowledged or properly accounted for.
Transparent, well-targeted support for the vulnerable is one thing; opaque subsidies that quietly drain the fiscal space are another. Any slide back into the latter would reverse the very reforms that created the current room for productive investment. Finally comes the refusal of opacity. Spending that cannot be tracked cannot be defended. The strongest protection for this windfall is consistent, quarterly, public, project-level reporting of exactly what every tier of government has bought with it.
A decade ago, Nigeria wore Africa’s crown on the strength of an exchange rate it could not defend; today it sits fourth on the strength of numbers it can. That is progress of the most valuable kind, because a target measured honestly can be reached. The revenue transformation is real, and the reforms that produced it deserve their credit, but ₦88.91 trillion is not an achievement. It is an option, exercisable once, within roughly a five-year window, before commodity cycles and politics narrow it. Spent on power, logistics, gas, agriculture, broadband, people and security, it purchases the productive base from which a trillion-dollar economy becomes arithmetic rather than aspiration, and the climb from fourth place back to first becomes a staging post rather than a slogan. Spent as previous windfalls were spent, it purchases a larger payroll and a familiar regret. The money has been mobilised. The economy Nigeria wants must now be itemised, sector by sector and project by project, because a trillion-dollar economy is not collected. It is built.
. Dr. Victoria Hauwa Jatto is an Economist and Senior Lecturer at the Nasarawa State University, Keffi.
All FAAC revenue and disbursement figures are drawn from the monthly reports of the Office of the Accountant-General of the Federation (OAGF); internally generated revenue figures from the National Bureau of Statistics (NBS); federation revenue components from the Central Bank of Nigeria and the Nigeria Revenue Service; and international comparisons from the IMF and the World Bank Email: hauwavibrahim@nsuk.edu.ng