For decades, Nigeria’s economic narrative was inextricably linked to crude oil. Federal income and foreign exchange earnings were primarily dependent on oil exports, leaving the country vulnerable to global price shocks. Investors and experts focused on this weakness, knowing that any disruption in the oil market might have far-reaching consequences for the economy.

 

These points were highlighted in a report by Quartus Economics, titled “Nigeria Unshackled: Inside the Rise of a Fiscal State”, which shows that the dependence on oil has dramatically changed.

 

The report observed that in recent years, a notable shift has taken place, as the West African country has gradually reduced its dependence on oil revenues, moving toward a more diversified fiscal structure.

 

A decade ago, oil contributed roughly three-quarters of total government revenue. Today, that share has dropped significantly to about one-quarter, based on fiscal data from 2023 and 2024.

 

Per the report, the actual transformation is the increase in non-oil and tax revenues. Tax revenues used to account for less than half of government earnings, but now account for up to 87% of total federation revenue. Non-oil sources have also grown dominant in tax collections, accounting for more than 70%.

 

“Non-oil revenue grew from 25% in 2010 to nearly 75% of revenues by 2024,” the report states.

 

“From 44.5% in 2014, non-oil taxes now account for nearly three-quarters (75.9%) of federally collected taxes, as the contribution of oil taxes dropped from nearly 55% in 2015 to less than a quarter in 2025,” it adds.

 

This represents a fundamental rebalancing of Nigeria’s revenue model, indicating progress toward a more stable and predictable fiscal situation.

 

“Between 2015 and 2019, the country earned 41% less from oil than it had earned in the prior 5 years (2010-2014). While non-oil revenues grew 39% during 2015 to 2019 (versus 2010 to 2014 total), the net effect was a 20% drop in total federation revenues during the second half of a decade of mixed fortunes,” the report states.

 

“During the last three years (2023 – 2025), Nigeria earned ₦62.3 trillion in taxes alone, of which the oil sector contributed just 27% of total taxes, while the non-oil sector accounted for over 73% (₦45.48 trillion).

 

“In 2025, tax collection grew by 30%, also driven primarily by non-oil taxes, which accounted for nearly 84% of the growth in federally collected taxes. Within three years, Nigeria’s tax revenue nearly tripled from ₦10.18 trillion in 2022 to ₦28.29 trillion in 2025.”

 

However, this growth is not without its hurdles. Over the last decade, the country’s debt-to-GDP ratio has more than tripled, prompting concerns about fiscal sustainability.

 

“Public debt to GDP rose from 11.42% in 2012/13 to 34.9% in 2023/24 while debt service to revenue rose from 6% in 2012/13 to 38.5% in 2023/24,” the report states.

 

Although inflation has fallen to approximately 15% from a high of 30% in 2024, borrowing rates remain high, limiting the economy’s ability to drive growth and investment.