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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.”
According to the ‘Anatomy of a Cyber World: Global Report by Kaspersky Security Services’, there has been a noticeable decline in the percentage of high-severity incidents over the past few years.
While 2021 recorded the highest proportion at 14.3%, 2025 experienced the lowest in six years at just 3.8%. This trend indicates that many attack attempts were quickly detected and effectively mitigated by Kaspersky MDR experts, preventing their severity from escalating beyond medium levels.
High-severity incidents are defined as attacks involving direct human involvement that result in a significant impact on the customer’s IT infrastructure. In 2025, the number of such incidents detected by Kaspersky MDR decreased by 19% compared to 2024, highlighting improvements in early detection capabilities and more effective remediation efforts among Kaspersky MDR clients.
A detailed analysis of the root causes of these incidents in 2025 reveals the following insights:
Human-driven attacks accounted for approximately 23% of high-severity incidents. Although this represents a slight decrease from 2024, they continue to be the primary cause of serious breaches.
Kaspersky detected such attacks in nearly 21% of customers, demonstrating that motivated adversaries persist in bypassing automated defences. Despite advancements in automated detection tools, these highly skilled attackers still find ways to evade security measures.
Confirmed cyber exercises like Red Teaming made up over 23% of incidents. When activity is verified as part of security testing, it’s often classified as infrastructure false positives, though customers frequently report them as incidents.
Social engineering ranked third, responsible for over 15% of high-severity attacks and affecting nearly 18% of organisations. These are classified as high-severity when successful and not automatically remediated, often leading to security awareness recommendations.
Security policy violations constituted just under 14% of all cases, involving legitimate accounts performing suspicious actions like data exfiltration. Malware incidents represented less than 12%, while artifacts from past attacks, or APT traces, were found in over 7% of cases. Vulnerability detection, though not core focus for Kaspersky MDR, was reported in fewer than 5% of incidents.
“The decline in high-severity incidents highlights the critical importance of adopting a proactive cybersecurity strategy. Human-led solutions such as Managed Detection and Response (MDR) and Incident Response remain essential in combating sophisticated, human-driven threats.
To further enhance the effectiveness and efficiency of in-house security teams, organisations should incorporate advanced, automated solutions like Extended Detection and Response (XDR), which provide improved visibility and enable faster responses.
Additionally, leveraging SOC consulting services can assist in building a robust Security Operations Center from the ground up or optimising an existing one for maximum performance.
An integrated approach to hybrid security operations empowers organisations to detect threats early, contain them swiftly, and ultimately prevent severe breaches from occurring,” comments Sergey Soldatov, Head of Security Operations at Kaspersky.
Google and UpSkill Universe, Sub-Saharan Africa’s leading AI and business skills training partner, have announced a major redesign of the Google Hustle Academy programme.
For the first time, the free training initiative is open to everyone, not just business owners. The new curriculum is focused on equipping individuals and entrepreneurs with practical AI skills.
Small businesses are the engine of Africa’s economy, creating over 80% of jobs on the continent. To help them grow, the Hustle Academy was launched in 2022, providing bootcamp-style training on business strategy, digital skills, AI, and leadership. The program has since trained over 18,000 SMEs, with many reporting increased revenue and job creation.
Now, as AI reshapes the job market, the program is evolving. The 2026 edition is built for anyone in Sub-Saharan Africa, including employees, students, and jobseekers, who wants to use AI to advance their career.
To meet the needs of a diverse audience, the new format includes short, 60-minute webinars and more immersive, high-impact bootcamps. These sessions are laser-focused on putting AI to work immediately in areas like digital commerce, marketing, and growth strategy.
Speaking about the academy, Gori Yahaya, Founder & CEO UpSkill Universe said “The 2026 Hustle Academy is designed to close the AI Skills gap with hands-on training that is short, focused, and immediately useful. AI is reshaping how businesses win and how careers are built, right across this continent.
“We’re excited to renew our partnership, now in its fifth year with Google, combining their global AI leadership with our deep regional AI expertise. The next wave of AI leaders will come from this continent. We are making sure they are ready.”
The Hustle Academy initiative has strengthened digital competitiveness across emerging African economies by enabling SMEs to move beyond AI awareness to practical implementation, positioning them for sustained growth in an increasingly AI-driven business environment.
“We believe that the future of Africa’s digital economy lies in the hands of individuals and entrepreneurs alike. Our new strategy focuses on scaling reach by training individuals in the latest AI-centered tools and techniques,” said a Google representative.
Lagos State has dragged 45 individuals and firms, including Bi-Courtney Aviation, DAAR Communications and Leaders & Company, to revenue court for tax debts running into billions of naira.
Lagos Govt
Bi-Courtney, operators of Murtala Muhammed Airport Terminal Two, faces N38.7 million claim; DAAR, behind Africa Independent Television, owes N22.4 million; ThisDay publishers Leaders & Company allegedly skip N67.1 million.
GMT Energy Resources tops corporates at N145.8 million, followed by Sheriff Deputies at N132.1 million; others like Heyden Petroleum, AA Rescue, BRT operator Primero also listed.
Individuals owe N13.5 million to N35 million each.
Attorney-General Lawal Pedro said suits followed ignored notices, aiming to enforce laws and fund infrastructure.
More defendants: IENG Nigeria, James Fisher, V Care Diagnostics, Venture Garden, Saro Africa, Barry Callebaut, Native Media, First Consulting, Eyowo Payments.
Compliant taxpayers post-notice escaped prosecution; defaulters risk penalties, interest, jail.
Pedro urged prompt filings and payments.
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