January 07, (THEWILL) — Nigeria’s tax-to-GDP ratio is projected to improve in 2026 as ongoing fiscal reforms begin to translate into stronger revenue mobilisation and broader tax compliance.
Analysts say recent policy measures including tax administration reforms, digitisation of collections, expansion of the tax base, and improved enforcement are expected to gradually raise government revenues relative to economic output, reversing years of underperformance.
Nigeria’s tax-to-GDP ratio has historically lagged peer economies, limiting fiscal space and increasing reliance on borrowing.
However, reforms targeting leakages, exemptions, and informal sector participation are now reshaping revenue dynamics.
From a capital market perspective, a rising tax-to-GDP ratio could strengthen public finances, reduce deficit pressures, and lower sovereign risk, improving investor confidence in government securities and broader financial markets.
Stronger revenue performance may also ease pressure on monetary policy and support macroeconomic stability.
Market watchers note that sustained reform implementation will be key.
While near-term gains may be modest, consistent execution could position Nigeria closer to emerging market averages over the medium term, supporting long-term growth and investment.
Ogochukwu Onwaeze
