July 06, (THEWILL) — The challenges of insecurity and food crisis pose significant threat to the ambitious gains of Nigeria’s tax reforms as implementation of the landmark fiscal initiative advances into the second half of the year.
The Nigeria Revenue Service (NRS) has set a total tax and royalty collection target of N40.7 trillion for the 2026 fiscal year. This is a 44 percent increase compared to the N25.2 trillion target set in 2025 underscored by the optimism that the new fiscal order ignites. Conversely, the harmful trends of expanding insecurity and deepening food crisis have continued to escalate.
Worrying data
A new six-year investigation by the Observatory for Religious Freedom in Africa, ORFA, has revealed that 79,323 people were killed in terrorism-related violence across Nigeria between 2020 and 2025, while 34,773 civilians were abducted during the same period.
The findings were unveiled in a report titled, “Four Times Boko Haram? How the World Misreads Nigeria’s Violence”, and announced in a statement signed by ORFA Senior Research Analyst, Frans Vierhout, in Jos, on Tuesday, June 30, 2026..
According to the report, the violence translated into an average of seven attacks and 36 deaths 36 per day. The ORFA stated that of the total deaths recorded, 42,033 were civilians, while 37,290 involved security personnel and members of armed groups.
The organisation said its researchers spent years analysing and cross-checking attack patterns, adding that the findings challenged prevailing assumptions about the drivers of insecurity in Nigeria.
The report stated that that Boko Haram and the Islamic State West Africa Province, ISWAP, often identified as major actors in Nigeria’s insurgency, accounted for 12 per cent of civilian deaths recorded during the period; Boko Haram, eight per cent; and ISWAP four per cent.
ORFA further claimed that armed groups it classified as “Fulani Terror Groups” were responsible for 44 per cent of civilian killings, amounting to 18,577 deaths, compared with 4,941 deaths attributed to Boko Haram and ISWAP combined.
Deepening concern
Similarly, a recent report indicating that food insecurity is anticipated to worsen throughout northern Nigeria is worrying. Industry experts emphasise that the consequences reach far beyond mere hunger. They impact the very core of economic productivity, consumer expenditure, business profitability, and government revenue generation.
Northern Nigeria continues to be the agricultural hub of the nation, yielding significant amounts of maize, sorghum, millet, rice, beans, tomatoes, onions, peppers, and livestock. Disruptions in agricultural production caused by insecurity, climate shocks, flooding, and attacks against farmers have far-reaching effects on the national economy.
A decrease in agricultural output results in diminished incomes for millions of farmers, traders, transporters, processors, and market operators. Each reduction in their earnings leads to lower personal income tax, decreased corporate tax from agribusinesses, weakened value-added tax collections due to reduced consumption, and declining revenues from various state and local government levies.
Food inflation exacerbates the situation. As food prices continue to escalate, households allocate a larger portion of their disposable income to basic necessities. Spending on clothing, housing improvements, transportation, education, healthcare, entertainment, and other taxable goods and services diminishes.
Businesses in these sectors face declining sales, reduced profits, and weaker tax contributions. The tax burden does not vanish; instead, the tax base shrinks. Even businesses that remain profitable may curtail their expansion plans due to falling consumer demand. This shrinks investment space.
A reduction in investments leads to fewer jobs, lower payroll taxes, and diminished corporate tax revenues over time. The poverty aspect is even more concerning. As an increasing number of Nigerians slip below the poverty line, the informal economy continues to grow. Small-scale survival businesses seldom produce substantial taxable income.
Consequently, the government must confront the challenging reality of trying to collect more revenue from an ever-shrinking pool of formal businesses and salaried workers. This results in a vicious cycle. Heightened tax pressure on compliant taxpayers may deter investment, diminish competitiveness, and promote tax avoidance, ultimately undermining revenue mobilization instead of strengthening it.
Contrasting optimism
The Federal Government has established an ambitious goal of substantially enhancing Nigeria’s tax-to-GDP ratio in the forthcoming years via comprehensive tax reforms. These reforms aim to expand the tax base, enhance compliance, minimize leakages, and streamline tax administration. Although these initiatives are praiseworthy, their success is largely contingent upon continuous economic growth and increasing incomes.
Economists emphasise that taxation fundamentally relies on economic activity. Governments, therefore, cannot sustainably increase tax revenues from an economy where households are struggling to secure basic food, businesses are experiencing falling sales, farmers are leaving their fields, and unemployment is on the rise. The connection is clear: as incomes decrease, tax revenues also face significant pressure.
Similarly, while policymakers have concentrated on tax reforms, broadening the tax base, and enhancing compliance, the escalating humanitarian crisis, particularly in northern Nigeria, poses a significant threat to these initiatives by reducing taxable economic activity and driving millions of households further into poverty.
Renowned economist, Bismarck Rewane has consistently argued that insecurity, poverty, and food inflation are major constraints on Nigeria’s economic growth and fiscal sustainability.
At the June 2026 Lagos Business School Breakfast Session, Rewane described Nigeria’s economic reforms as a “mixed bag,” stressing that rising insecurity and poverty continue to undermine economic gains despite GDP growth. He warned that unless insecurity is addressed, revenue growth and fiscal stability would remain under pressure.
He has also argued that public spending should prioritize security and productive investments rather than indiscriminate expenditure cuts because insecurity discourages investment, reduces agricultural output, and weakens economic expansion.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
