Written by Ugo Inyama
Trust is the silent currency that gives legitimacy to taxation. When the government is strong, it increases revenue through cooperation rather than coercion. Weak public finances make it difficult for even well-designed fiscal systems to function.
For many Nigerians, paying taxes is like pouring water into a basket. Budgets have expanded, but results remain meager. While hospitals lack basic equipment, ministries are increasing. Politicians are becoming increasingly at ease even as the public is being told to tighten their belts. This rupture has disrupted the social contract that underpins sustainable revenue systems. The central challenge facing Nigeria today is therefore not simply how to raise more funds, but how to restore confidence in the purpose and use of public funds.
A nation with ambition but weak cash flow
Nigeria’s financial situation increasingly resembles that of large households with great plans but unstable incomes. Ambitions are big and obligations are many, but inflows and outflows rarely match. Each cycle ends with borrowing, improvisation, and deferred maintenance. Over time, even the most carefully crafted plans will begin to sag under their own weight.
For decades, oil revenues have functioned like a generous but unpredictable cousin, intervening in good times and masking deep structural weaknesses. That cushion has become thinner. Due to the global energy transition, production constraints and price fluctuations, oil has lost its former reliability. What remains exposed is the narrow domestic revenue base supporting a very large and complex economy.
Nigeria’s tax system is like a narrow bridge with heavy traffic. While the small public sector bears most of the burden, vast areas of economic activity remain lightly taxed or completely untaxed. This imbalance was tolerated as long as oil money flowed. Today, stress fractures cannot be ignored.
Reform as a structural repair, not a cosmetic change
The current push for revenue mobilization should be understood as a structural repair rather than a cosmetic change. Rather than simply increasing the tax rates that are already compliant, the focus has shifted to widening the tax base, improving taxpayer identification, reducing leakages, and modernizing collection systems.
Revenue management reforms aim to correct long-standing weaknesses such as fragmented data, manual processes, discretionary enforcement, and duplication between government agencies. These failures turned taxation into negotiation and compliance into selective burden.
Digitalization promises a transition from opacity to visibility. Better data gives governments a clearer picture of economic activity and allows them to allocate responsibility more equitably. In principle, this is healthy. Modern economics doesn’t work on guesswork and desk records alone. But even the strongest financial structure will fail if it is built on a foundation of mistrust.
Trust, waste, and the trust gap
Taxation is ultimately an act of faith. Citizens give up private income in the hope that the state will convert it into public value. In Nigeria, that promise has been undermined by years of wasteful spending and weak accountability.
Waste is not limited to corruption. It also manifests itself in bloated governance structures, dual agencies, inflated contracts, abandoned projects, and poor maintenance of existing assets. Each motorcade, each unfinished road, each white elephant project quietly signals to taxpayers that their contributions are not lacking enough to be respected.
This perception is corrosive. It turns compliance into resentment and reform into suspicion. When enforcement increases without visible spending restraints, the public interprets it as unfair rather than disproportionate. Like oil in an engine, trust reduces friction. Without this, the system will grind noisily and inefficiently.
Restoring trust therefore requires more than new laws. Particularly visible changes are required in the behavior of top management.
Discipline spending as the missing half of reform
Revenue mobilization without spending reform is like pouring fuel into a leaking car. The question for Nigeria is not just how much money to raise, but how much to spend reasonably. Citizens are much more likely to accept a broader tax net if they see governments tightening their belts first.
This means fewer symbols of excess, clearer priorities, and stronger procurement discipline. It means closing projects before announcing new ones, choosing maintenance over endless expansion, and forcing the consequences of waste.
Transparency must also be practical, not performative. The public should be able to track public funds from budget approval to project completion. Once the results become visible, taxation begins to feel more like a participation than a loss.
Beyond Taxes: Dormant Income
A serious revenue strategy must extend beyond taxes. Nigeria is underperforming in the management of public assets, concessions and customs operations. Too often, governments act like landlords who own valuable property while struggling to pay basic bills.
Ports leak revenues, concessions are underserved, and state-owned enterprises drain resources that could have financed development. Addressing these inefficiencies is politically more difficult than raising taxes, but economically more beneficial.
Local governments also remain overly dependent on central allocations. Without stronger incentives for internal revenue generation, fiscal federalism creates dependency rather than development.
Dilemma of revenue mobilization
Revenue mobilization is difficult because it forces calculations. This reveals who pays, who doesn’t, who benefits, and who absorbs the costs of inefficiency. It challenges deep-seated interests and comfortable arrangements. This is why it is often treated as technical, despite its deep political content.
The real test of reform is not new platforms or laws. The question is whether the people will finally feel that the country has responded only half-heartedly. Do they find restraint in their excesses? Will you deliver when promised? Who is responsible in case of impunity?
Revenue is the bloodstream of a nation, but trust is the heart that moves it. Unless Nigeria can restore confidence in how public money is spent, it risks losing the consent to make taxation sustainable while perfecting its collection mechanisms.
*Written by Ugo Inyama from the African Center for Digital Governance, Manchester, UK
Email: Ugo@africandgc.org
w: www.africandgc.org
