By Yinka Kolawole

The manufacturing sector’s contribution to tax revenue collections in Nigeria maintained an upward trend in 2025, contributing a total of N1.17 trillion in Value Added Tax (VAT) representing an increase of 45.61 percent over the N803.53 billion recorded in 2024 while the sector’s Company Income Tax (CIT) contribution rose to N881.29 billion, marking a 32.83 per cent increase from N663.46 billion recorded in 2024.

Analysts say that the strong year-on-year growth reinforces the sector’s expanding role in government revenue generation and Nigeria’s industrial development.

The latest data from the National Bureau of Statistics (NBS) highlights the resilience of the manufacturing sector despite prevailing economic challenges, underscoring the sector as a critical pillar of the country’s fiscal base.

The NBS data shows that sector maintaining its position as the country’s largest contributor to VAT revenue. VAT contributions from the manufacturing sector remained relatively stable throughout 2025, generating N286.95 billion in the first quarter of 2025 (Q1’25), N297.68 billion in Q2’25, N290.79 billion in Q3’25, and N292.12 billion in Q4’25.

A breakdown of the figures also revealed that manufacturing contributed N107.90 billion to CIT in Q1’25, rising significantly to N360.20 billion in Q2’25 – the highest quarterly figure for the year. CIT collections, however, moderated to N271.34 billion in Q3’25 before declining further to N141.84 billion in Q4’25.

The trend suggests that while the sector sustained strong overall growth, macroeconomic pressures continued to influence performance across quarters.

This pattern aligns with broader CIT trends as the total CIT collections dropped sharply to N1.49 trillion in Q4’25 from N2.96 trillion in Q3’25, representing a 49.81 per cent quarter-on-quarter decline. Nonetheless, total CIT still recorded a 13.38 per cent year-on-year increase compared to Q4’24. Aggregate CIT for 2025 stood at N9.218 trillion.

Overall, the data highlight the manufacturing sector’s growing importance in driving Nigeria’s non-oil economy and supporting ongoing diversification efforts away from crude oil dependence. Key segments such as consumer goods, cement, and industrial materials were instrumental in boosting output and tax revenues.

However, industry operators continue to grapple with persistent challenges, including high production costs, exchange rate volatility, and infrastructure deficits.

Despite these constraints, the sector’s rising tax contribution points to its resilience, even as macroeconomic conditions remain a significant determinant of quarterly performance.

Source: Vanguard News