Why Is Tax Collection Low in Nigeria?

Despite being Africa’s largest economy, Nigeria is one of the poorest. In 2017, Nigeria had one of the lowest tax-to-GDP ratios in the world. IMF

Written by Paul Jegede

Dec 14, 2020

Despite being Africa’s largest economy, Nigeria is one of the poorest. In 2017, Nigeria had one of the lowest tax-to-GDP ratios in the world. IMF

All over the world, from the UK to South Africa to Nigeria, each government is tackling with the health and economic impact of the coronavirus pandemic. In dealing with the crisis a lack of funds has existed due to multiple reasons, with one of the causes being poor tax collection. Tax collection in the country flounders for a variety of reasons, but mostly because Nigerians pay little to no taxes.

Tax resistance has always been a key aspect of the country’s history, all across its diverse ethnicities. Take the Igbos as an example. Eze-builo, a popular Igbo surname literally means ‘a king is an enemy’, a reminder of an entire tribe’s distaste for despots and the levies they come with. When colonial forces attempted to tax the region, the communities famously mentioned ‘you are demanding tax from the dead’. After it fell on deaf ears, the famous Aba women riot of 1929 forced the colonial authorities to reconsider.

Up north, the Fulani’s revolt centuries ago gained success in part due to the writings and pamphlets of Othman Dan Fodio. These works denouncing the Habe’s tax practices in the Kitab al-farq galvanized his fellow Fulani’s and even some non-Muslim Hausas. Even down west, Yoruba labourers arranged to form the Agbekoya-Parapo revolt of 1968-69, to seek a reduction of taxes in the region.

One thing that can count as a similarity across Nigeria’s varied peoples is that we are not too friendly to anyone dipping their fingers in our coffers. It is brightly portrayed in our history, culture and conduct. As one looks into modern times, this aspect of history is ever-present in our modern society, our people and accepted norms.

With the responsibilities of modern-day governments expanding beyond security and provision of infrastructure to include financing investments in human capital, providing social infrastructure to poor citizens, and intervening to support the private sector, taxes are all the more necessary. This makes the country’s traditional outlook to tax dated by modern requirements.

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About the Author

Paul Jegede

is a consultant and business analyst with a background in economics.

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Why Is Tax Collection Low in Nigeria?