LAGOS — Nigeria’s federal government missed its first-quarter 2026 tax revenue target by 23.1%, collecting N7.44 trillion against a prorated budget projection of N9.68 trillion required for the fiscal year.
The N2.24 trillion shortfall occurred despite the newly unified Nigeria Revenue Service (NRS) enforcing sweeping reforms under the Nigeria Tax Act to hit an unprecedented N40.7 trillion full-year collection target.
The Q1 performance means the apex revenue agency achieved only 18.2% of its annual budget mandate, forcing fiscal authorities to confront an immediate revenue deficit that could expand domestic borrowing.
Data from NRS showed that Nigeria generated N6.04 trillion in the first three months of 2025, surpassing its N5.82 trillion target by N218.02 billion with a performance rate of 103.74%.
However, the missed target follows a historic 44% hike in the country’s annual tax collection budget, up from the N28.3 trillion target set by the defunct Federal Inland Revenue Service in 2025.
With the Central Bank of Nigeria sustaining monetary tightening to combat inflation, manufacturers and corporate entities faced rising operational costs, directly squeezing the taxable income pool during the quarter.
Analysts warn that the NRS must increase its average quarterly collection by 30% to N11.08 trillion over the next three quarters to prevent a severe breakdown of the 2026 budget.
However, the revenue fell short of the pro-rated N9.68 trillion quarterly target required to meet the government’s unprecedented N40.7 trillion full-year revenue projection for the 2026 fiscal cycle.
The legislative reforms, which centralized mineral and non-mineral revenue collection under the NRS, aimed to eliminate duplicate taxes while expanding the non-oil tax net across the federation.
The Q1 deficit occurs amid persistent inflationary pressures and monetary tightening by the Central Bank of Nigeria, which has significantly increased the borrowing costs for local businesses and manufacturers.
Analysts warn that continued revenue shortfalls could pressure the naira and complicate macroeconomic stability if revenue collections fail to accelerate significantly in the second quarter.
