Nigeria’s manufacturing sector has emerged as a key driver of Value Added Tax (VAT) revenue in 2025, with contributions rising sharply in the first nine months of the year. According to the National Bureau of Statistics (NBS), manufacturers paid a total of N875.420 billion in VAT between January and September 2025 (9M’25)—a substantial increase over the N566.011 billion recorded in the same period in 2024 (9M’24) and even surpassing the N578.394 billion collected throughout the entire 2023 fiscal year.
This represents a 54.7 per cent year-on-year growth, or an additional N309.409 billion in VAT remittances from the sector, highlighting its growing fiscal importance to Nigeria’s non-oil tax base. In fact, the nine-month contribution in 2025 exceeds the full-year 2023 total by about 51.3 per cent, reflecting a sharp acceleration in payments.
Sectoral breakdowns from the NBS Q3 2025 VAT report show that manufacturing consistently topped contributions, accounting for 25.89 per cent of VAT in Q3, followed by Information and Communication (18.77%) and Mining and Quarrying (14.85%). The sector also led VAT collections in Q1 (26.03%) and Q2 (27.19%), cementing its role as a cornerstone of Nigeria’s fiscal landscape.
Analysts attribute the surge to several factors, including higher product prices, rising production costs, and currency depreciation, all of which have increased the taxable value of goods along the manufacturing supply chain.
Yet the sector continues to operate under significant macroeconomic pressures, including high energy costs, foreign exchange volatility, and weak consumer purchasing power. Despite these challenges, manufacturers have maintained their position as one of Nigeria’s largest contributors to VAT revenue, providing the government with a critical source of non-oil income.
Economists note, however, that the spike in VAT payments does not necessarily indicate a proportional increase in industrial output. Instead, they caution that inflation-driven price adjustments and exchange-rate effects may have inflated nominal tax collections, suggesting that the growth in revenue reflects both higher prices and greater fiscal extraction rather than a parallel expansion in production.
The Manufacturers Association of Nigeria (MAN) has weighed in on the issue, acknowledging the sector’s importance to government revenue while raising concerns about the heavy VAT burden on companies. Director General Segun Ajayi-Kadir warned that high VAT rates, combined with rising operational costs, could undermine competitiveness and threaten jobs.
“The high VAT rate, along with other taxes and levies, makes Nigerian products less competitive both locally and internationally,” Ajayi-Kadir said. “This is particularly concerning when compared with foreign goods, which may not face similar tax pressures.”
MAN has consistently cautioned against further VAT increases, arguing that they could trigger reduced demand, build up unsold inventory, and lower profitability for manufacturers. The association also highlighted the social impact, noting that higher VAT is typically passed on to consumers, disproportionately affecting low- and middle-income earners and potentially negating the benefits of national minimum wage increases.
As Nigeria continues to rely increasingly on non-oil taxes to support public finances, the manufacturing sector’s contribution underscores its critical fiscal role. At the same time, stakeholders stress the need for balanced taxation policies to sustain industrial growth and competitiveness in an increasingly challenging economic environment.