By FBNQuest Research
The Central Bank of Nigeria’s (CBN) most recent monthly economic report shows that federally collected revenue increased by 40% month-on-month (MoM) and 64% year-on-year (YoY) to N2.7trn in February 2025.
This marks a notable rebound from the lower receipts recorded in the prior month. Despite the significant improvement, the revenue take still fell short of the monthly revenue benchmark of N3.0trn.
The persistent revenue shortfalls relative to the implied revenue target can be attributed to the FGN’s ambitious revenue assumptions.
After deductions and transfers, and some additional revenue from other sources, mainly from exchange rate gains, the balance left for distribution to the three tiers of government amounted to N1.5trn, reflecting increases of 4% MoM and 29% YoY, respectively.
The sharp MoM rise in federation receipts was primarily driven by the recovery of non-oil revenues in February, following an underwhelming revenue performance in January.
Specifically, receipts from non-oil sources increased by 42% MoM to N1.9trn and were +54% higher than the pro-rata monthly budgeted benchmark.
The improved revenue outcome was mainly due to strong collections from companies’ income tax (CIT) to N634.7bn from N357.6bn in the prior month.
Similarly, revenue from value-added tax and customs and excise duties also increased by 54% MoM and 19% MoM to N400.3bn and N649.6bn, respectively.
On the part of oil revenues, their receipts increased by 34% MoM to N813.2bn but fell significantly short of the monthly revenue target of N1.8trn.
Revenue from royalties, which increased to N519.6bn from N338.0bn, was the primary driver of the higher MoM receipts.
While oil revenues continue to face significant headwinds due to their vulnerability to external shocks, we expect revenues from non-oil sources, particularly from VAT and CIT, to continue to support the FGN’s revenue position.
That said, FBN analysts expect the reformation of the nation’s tax system, which seeks to address persistent revenue leakages and improve tax administration measures, to raise non-oil revenues further in the near term (see chart below)
