June 02, (THEWILL) – Imo, South-East Nigeria, climbed up a step in the first quarter of 2025 from its bottom position as the least performing state in Value Added Tax (VAT) collection as of 2024.
According to data furnished by the Federation Account Allocation Committee (FAAC) last week, Imo notched up a step above Taraba after occupying the bottom of the table in 2024 as the worst performing territory in VAT collection among Nigeria’s 36 states.
In 2024, Imo recorded a relatively paltry N4.38 billion behind three states with the lowest figures – Abia N8.68 billion and Kebbi N8.77 billion. Imo was N4.30 billion, almost 50 percent, lower than Abia that it followed.
In Q1 2025, Imo narrowly escaped the bottom position – recording N2.34 billion against N2.33 billion collected by Boko Haram-ravaged Taraba which had achieved N32.37 billion to secure the 13th position in 2024 when Imo occupied the bottom of the table.
The poor performance of Imo in VAT collection, is a matter for concern to observers as the South-East region is not known for economic backwardness compared to the Boko Haram-ravaged Northern states.
Industry experts observe that VAT collection is majorly a reflection of the level of economic activities in the area in addition to other factors such as efficiency, inflation and investment
“If a state contributes little to the VAT pool, it suggests the area is economically feeble and less productive,” said Dr Desmond Agunze, an Economist.
According to Agunze, a state might generate low VAT due to several factors, including a weak economy, high inflation, and a focus on informal or counterfeit markets. Low aggregate consumption or demand due to these factors can also result in reduced VAT revenue.
Additionally, a state’s economic productivity, and the overall health of its business environment, play a significant role in VAT collection.
“A state with a struggling economy, high unemployment rate, or low purchasing power is less likely to generate high VAT revenue. Although, inflation plays a role as it erodes the value of money, making consumers less likely to spend and increasing the cost of goods and services, thus reducing VAT collection, it mirrors the actual level of productivity and economic activity,” Agunze told THEWILL last Friday.
Industry analysts also posit that a state dominated by informal economy is likely to generate low VAT compared to those areas characterised by investment.
“A largely informal economy, often characterised by counterfeit goods and unregulated transactions, makes it difficult for authorities to accurately track and collect VAT,” Mojisola Akinremi, an agribusiness operator, said.
She noted that a state’s ability to attract investment and foster economic growth is crucial for generating VAT.
“Insecurity and a lack of confidence in the business environment can deter investment and negatively impact VAT revenue,” said Akinremi.
Imo has been notoriously referred to as the epicenter of insecurity among the South-East states, especially in the last six years, causing economic disaster and heightening unemployment. The food producing areas such as Oguta, Ohaji and Egbema have been reduced to barren lands despite being the state’s oil and gas bearing communities due to insecurity.
THEWILL reports that despite housing the largest natural gas reserves and significant crude oil deposits in Nigeria, Imo attracted zero foreign investment in four years, between 2020 and 2023, according to data by the NBS.
The NBS in its quarterly Capital Importation reports showed that, after recording the sum of $3 million in 2019, Imo had no dime to its name by way of investment inflow during the reference period.
The reports further revealed that Imo was the only oil-producing state in the South-East region that attracted no foreign investment for the four years under review, unlike its two counterparts – Anambra and Abia states which achieved a total of $51.48 million and $210.12 million, respectively.
The reports did not offer details of the investments to the states by sectors and products. However, Abia recorded the highest bulk of $150.09 million investment inflow in the third quarter of 2023, after the inauguration of Mr Alex Otti as the elected 4th governor of the state in May 2023.
Imo’s unimpressive situation is more worrying on the ground that the state is known for its largest natural gas reserves in the country and in West Africa, which is the source of commercial supplies to Lagos and other upcountry locations. Imo gas is also the major source for the Lagos Gas Company that feeds many companies, households and large establishments up to the Agbara industrial zone in Ogun State.
Also, The widely celebrated NNPC’s 615 km AKK Gas pipeline project from Abuja to Katsina through Kano and beyond, via the gathering facilities all through Kogi state, will be fed largely with gas sourced from Ohaji-Egbema Local Government Area of Imo State, known for its abundant gas deposit, “Imo’s huge oil and gas deposits constitute an unprecedented economic asset that no other South-East state can boast of. So, for Imo to be lacking in foreign investment in oil, gas and other natural resources is a huge disappointment,” said Engr. Gregg Amadi, an oil and gas services operator.
Amadi’s position re-echoed in the statement by the former Minister of State for Petroleum, Chief Timipre Sylva. According to Sylva, Nigeria has nearly 300 trillion cubic feet of natural gas reserves, ranking 9th in the world, with Imo holding the largest reserve amongst all Nigerian states. “Imo state with 200 trillion cubic feet of gas deposits should be set for economic boom,” Sylva said during a visit to the Imo Governor, Hope Uzodinma, in April 2021.
Although major oil and gas companies have presence in Imo, the NBS reports indicated that the state does not serve as the operators’ investment destination. The companies include Shell Nigeria Gas Limited, Ashland Oil Nigeria Limited and Seplat Energy Plc.
Amadi said the oil and gas firms use Imo as their outpost while their operational bases are in Port Harcourt or Lagos. “That is why Imo records zero foreign investment,” he opined.
But the fact that states like Akwa Ibom, Rivers, Ogun, Oyo, Adamawa and many other non-oil producing states record investment inflow contradicts Amadi’s claim.
Among the major gas facilities in Imo is the ANOH Gas Processing Plant development at OML 53 (and adjacent OML 21) operated by Seplat Energy, which the firm said would drive the next phase of its growth in expanding the gas business. The project which comprises a Phase One 300MMscfd midstream gas processing plant has since been concluded.
The gas plant located in OML 53, Niger Delta, will deliver dry gas, condensate, and Liquefied petroleum gas (LPG) otherwise known as cooking gas, to customers locally and inter.
ANOH is one of Nigeria’s most strategic gas projects. Experts say it will help the country to accelerate its transition away from small-scale diesel generators to cleaner, less expensive fuels such as natural gas for power generation. With such a significant project, stakeholders are concerned that Imo would be shunned by strategic investors, especially in the oil and gas sector.
The dearth of investment inflow impacts on the employment status of the state and this explains why Imo is among the states plagued with high unemployment rate according to reports by NBS.
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.
