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Nigeria Tax Spat Reignites Federalism Debate
A legal battle between the federal government and states over sales tax is fueling fierce debate about federalism in the country as politicians jockey for position before 2023 elections.
The spat –- whether federal or state governments have the right to collect value-added tax (VAT) –- may be about money, and the sum at stake runs into billions of dollars.
According to AFP, but the squabble also reflects long-standing questions about how Nigeria is governed and how wealth is shared in the continent’s top oil producer.
How the dispute ends may open up more state autonomy, analysts say, as wealthier southern regions test federal management of issues from oil resources and security policing to cattle grazing rights.
In August, a court in southern Rivers State, Nigeria’s petroleum heartland, ruled states should be responsible for collecting VAT and not the Federal Inland Revenue Service (FIRS).
Ezenwo Nyesom Wike, Rivers State governor, a staunch opposition Peoples Democratic Party (PDP) leader, pushed through a law authorising local collection of VAT, warning FIRS against any “sabotage.”
Southern Lagos State, the nation’s economic powerhouse including the commercial capital Lagos, quickly followed with its own law to collect VAT.
After a federal government appeal, the dispute is caught up in competing demands, with Abuja considering a Supreme Court challenge.
Abubakar Malami, attorney general, last week told reporters that only the national assembly could legislate on how VAT is levied.
“The federal government is looking at all options at its disposal, including the possibility of involving the jurisdiction of the Supreme Court,” he said.
Under Nigeria’s system, FIRS collects VAT centrally and the resources are distributed across federal, state and local governments.
VAT receipts in 2020 were N1.5 trillion or $3.6 billion. Under the current system the federal government gets 15 percent, with the rest split between states and local governments.
But richer southern states like Lagos and Rivers — Lagos alone produces around half of Nigeria’s VAT — have long complained they end up paying for poorer states mostly in the agricultural north but also some southern ones.
They want more “fiscal federalism,” meaning getting a bigger share of the VAT they collect and more responsiblity to manage their own affairs.
“What we are after is to ensure that this money is used for the people of Lagos State, and that is exactly what we have achieved,” Setonji David, a Lagos assembly lawmaker, told Channels TV.
– ‘Restructuring’ Nigeria –
The “restructuring” debate often resurfaces during election times in Nigeria, which became a single entity under British colonial rule in 1914 when the mainly Muslim north was joined with the mostly Christian south.
Regional identities for Nigeria’s major ethnic groups are often fiercely guarded — sometimes with separatist rhetoric — even as the federal government promotes national unity.
“We will see more of these scenarios, where different constituent entities will try to assert more control economically using political means over what is extracted or generated from their territories,” SBM Intelligence analyst Tunde Ajileye said of the VAT fallout.
The tax debate is especially sensitive after the coronavirus pandemic that battered Nigeria’s oil revenues and pushed Africa’s largest economy into its second recession in five years.
During the pandemic, the federal government increased VAT from five percent to 7.5 percent, providing much-needed revenue.
Eurasia Group’s Amaka Anku said decentralisation of tax management is unlikely, as most states lack expertise or willingness.
“Outside Lagos and the federal capital territory (Abuja), states are likely to be negatively affected by a decentralization of VAT collection, making the proposition politically unfeasible.”
But the VAT fight also plays into the heated tones before the 2023 election to replace President Muhammadu Buhari, a northern Muslim in power since 2015.
– Election tensions –
Critics of Buhari say since he came to power he has favoured northeners in a way that has intensified calls for more autonomy for states and even calls for separatism by some southern agitators.
Officials of the All Progressives Congress’ ruling party dismiss such claims and point to government investments across north or south.
But mass kidnappings, attacks and insecurity have also prompted calls from some southern leaders to have control over their own security forces.
VAT has joined a list of disputes where southern and northern leaders appear to be digging in on rival sides.
One of those is “zoning” — an unofficial power-sharing deal that rotates the presidency between candidates from the north and the south.
After two terms with northern Buhari, many southern leaders want a president from their region. Many leaders from the north disagree.
But despite the squabbling, analysts say a compromise on VAT is the likely outcome.
“The good thing about this is there has not been a use of violence or rhetoric, it is more the use of the court process,” said SBM’s Ajileye.
“I expect there will be some political settlement ultimately.”
Africa Prudential Plc has reaffirmed its commitment to sustainable growth and digital transformation after posting another strong half-year financial performance, driven by robust growth in its core registrar business, technology-driven solutions and increased activity in Nigeria’s capital market.
Speaking during the company’s H1 2026 Investor Call on Tuesday, the management outlined plans to deepen revenue diversification and accelerate innovation as part of efforts to reduce reliance on interest income and strengthen long-term profitability.
The company reported gross earnings of ₦4.28 billion for the first half of 2026, representing a 27 per cent increase from ₦3.34 billion recorded in the corresponding period of 2025.
Profit before tax rose by 22 per cent to ₦2.41 billion, while profit after tax climbed 18 per cent to ₦1.59 billion.
Net operating income also increased by 27 per cent to ₦4.21 billion, while total assets grew by 13 per cent to ₦46.53 billion. Shareholders’ funds similarly rose by 13 per cent to ₦12.52 billion.
According to the company, the impressive performance was driven by sustained growth in its registrar business, increased corporate actions across the Nigerian capital market, stronger treasury earnings supported by the prevailing interest rate environment and rising adoption of its technology-enabled products and services.African Mineral Wealth
Managing Director and Chief Executive Officer, Dr. Catherine Nwosu, said Africa Prudential is steadily evolving from a traditional share registrar into a diversified technology and business solutions provider serving the broader capital market ecosystem.
Addressing concerns from investors about the sustainability of earnings if interest rates decline, Nwosu said the company was deliberately expanding its non-interest income sources.
“Interest rates influence our treasury income positively, but that is why we are deliberately diversifying our revenue streams. Our strategy is to grow recurring fee-based business lines such as our digital solutions, Know Your Customer (KYC) services, AGM technology, probate services and the SabiVest mobile app. Over time, this will reduce our reliance on interest income and create a more balanced and resilient earnings mix,” she said.
She noted that increasing activity in the Nigerian capital market presents fresh opportunities for technology-driven solutions.
“With capital market activity nearly doubling over the past year, demand for seamless digital investor experiences, improved market efficiency and stronger compliance standards continues to grow. We are investing in technology-enabled solutions that position us to capitalise on these opportunities while delivering sustainable value to our shareholders,” she added.
Looking ahead, the company identified five strategic priorities for the second half of 2026, including driving sustainable growth through its core registrar business and new revenue streams, accelerating technology-led product innovation, strengthening brand leadership, investing in talent development and reinforcing corporate governance.
The investor call attracted institutional investors, shareholders, analysts, regulators and other capital market stakeholders, reflecting strong interest in Africa Prudential’s earnings outlook, revenue diversification strategy and long-term growth plans.
News
IHS Nigeria Donates Business-Support Equipment to Empower People with Disabilities in Abuja Community
Communications infrastructure company, IHS Nigeria, has donated business support equipment to empower people with disabilities within the Karonmajiji community in the Federal Capital Territory, Abuja. This is part of the company’s commitment to drive inclusive community development and sustainable livelihood support under its Project Empower initiative.
The equipment was distributed to beneficiaries during a ceremony held in the community on Monday, July 27. The initiative was conceived following a community needs assessment and is designed to empower active traders by providing them with business tools rather than cash grants, thereby strengthening their businesses and ensuring long-term economic impact and accountability.
Speaking at the event, Director, Sustainability, IHS Nigeria, Titilope Oguntuga, described the initiative as a reflection of the company’s commitment to advancing inclusive development by equipping persons with disabilities with the tools and opportunities needed to build resilient livelihoods.
She explained that rather than providing short-term financial assistance, IHS Nigeria adopted an asset-based approach by donating 50 pieces of business support equipment, including sewing machines, freezers, generators and hairdressing kits, to the selected beneficiaries.
According to her, the intervention is designed to create lasting value by supporting entrepreneurship, promoting self-reliance and strengthening household incomes, while contributing to the achievement of the United Nations Sustainable Development Goals, particularly SDG 1 (No Poverty), SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reduced Inequalities).
In his opening remarks, the Chief of the Karonmajiji Disabled Community, Alhaji Sulaiman Muhammed Katsina, represented by the Secretary of the Community, Alhaji Mohammed Dantani commended IHS Nigeria for its commitment to empowering persons with disabilities through practical and sustainable interventions.
He described the initiative as a demonstration of genuine partnership with the community and expressed appreciation for the company’s continued engagement with the Association, noting that the donation of the equipment was a significant investment in improving the livelihoods of persons with disabilities and would create meaningful economic opportunities for the beneficiaries and their families.
The event brought together traditional rulers, government representatives, leaders and members of the Karonmajiji Disabled Community Association, implementing partners, including Field of Skills and Dreams Vocational Technical and Entrepreneurship (FSD VTE) Training Institute and other community stakeholders, reaffirming a shared commitment to promoting inclusion and sustainable community development.
Project Empower reinforces IHS Nigeria’s commitment to advancing sustainable development through strategic partnerships that promote economic inclusion, strengthen community resilience and create opportunities for underserved communities.
The Chartered Institute of Bankers (CIBN) and the Association of Corporate Communication and Marketing Professionals in Banks (ACAMB) have enjoined banks to further deepen and prioritize financial inclusion, women’s empowerment and sustained growth through strategic mandates and frameworks, aimed at closing the financial gap and empowering more small, and medium enterprise (MSME) owners.
Both organisations made this call during a courtesy visit to the newly invested 24th President and Chairman of Council of the Chartered Institute of Bankers of Nigeria (CIBN), Dr. Dele Alabi, Ph.D, FCIB, as part of plans to congratulate him on his investiture as well as seek a stronger alliance between both bodies.
The visit followed Alabi’s investiture where he unveiled his “IMPACT” Vision, themed “Consolidating Our Local Impact, Enhancing Our Global Relevance.”
The vision rests on six pillars: Inclusion across geographic, gender, and generational lines; Membership growth and quality; Professionalism and ethics; Accountability; Competencies and skills development; Technology, automation, and innovation. Other areas of shared interest, include women empowerment, financial inclusion and literacy, as well as MSME clinics, all of which are top on his agenda.
Alabi explained that under him, the institute will be prioritising financial inclusion and women empowerment, because of its realisation that women are often the primary financial managers and caregivers in families. Access to savings, micro-credit, and insurance acts as a safety net during crisis and allows them to significantly improve living conditions.
He added that CIBN would be happy to drive joint knowledge sharing and exchange sessions with CBN and ACAMB across various platforms. “Educating the public through public awareness programmes, with ACAMB as the rallying point, is central to what we do,” he noted.
ACAMB President, Jide Sipe, who led the delegation, spoke in unison with the CIBN president, as he noted that, closing the inbalances in financial access help economies grow faster, reduces inequality, and encourages greater civic participation by all.
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