NIGERIA’S Value Added Tax (VAT) collections recorded robust growth in the first quarter of 2026, reaching ₦2.42 trillion, with the manufacturing sector maintaining its position as the largest contributor, accounting for 29.75 percent of total receipts, according to data released by the National Bureau of Statistics (NBS).
The sector also posted a healthy 12.82 percent quarter-on-quarter growth, driven by sustained industrial production, stronger domestic demand, and improved capacity utilisation.
“This dominant contribution underscores manufacturing’s strategic importance to Nigeria’s economic diversification agenda and its continued role as a major source of government revenue,” the NBS report noted.
The figure represents a 9.98 percent quarter-on-quarter increase from ₦2.20 trillion recorded in the fourth quarter of 2025 and a significant 17.06 percent year-on-year rise compared to the corresponding period in 2025.
Analysts from Cowry Assets Management Limited attribute the sustained expansion to improved tax administration, stronger compliance, and broad-based growth across key sectors of the economy.
Sectoral analysis released by the NBS highlights the increasing role of domestic economic activities in driving government revenue. Local VAT payments contributed ₦1.11 trillion, forming the largest share, while foreign VAT stood at ₦830.47 billion and import VAT at ₦477.55 billion. The strong performance of foreign VAT underscores the growing influence of digital services, cross-border transactions, and e-commerce, in line with recent tax reforms aimed at expanding the non-oil revenue base.
The Information and Communication sector placed second with a 20.61 percent share, reflecting the ongoing boom in telecommunications, fintech, digital services, and internet commerce. Mining and Quarrying followed in third position with 12.32 percent, benefiting from activities in the extractive industries.
While several sectors posted strong gains, performance was uneven. Activities of Households as Employers and Own-use Production recorded the highest quarterly growth at 74.36 percent, albeit from a low base. Arts, Entertainment and Recreation grew by 20.91 percent, signalling recovering consumer spending on discretionary services.
Conversely, some sectors contracted sharply. Education recorded the steepest decline at 31.96%l percent, followed by Public Administration and Defence (31.38 percent and Activities of Extraterritorial Organisations and Bodies (29.89 percent). These drops may reflect reduced taxable transactions and softer activity in those areas
Commenting on the figures, Cowry Weekly Financial Markets Review & Outlook described the VAT growth as encouraging evidence of resilience in Nigeria’s non-oil economy amid high inflation, elevated interest rates, and foreign exchange challenges.
“Strong VAT growth generally reflects increased business transactions, improving consumer demand, and enhanced formalisation of economic activities,” the report stated. It added that the steady rise in non-oil tax revenue supports the Federal Government’s fiscal consolidation efforts by reducing dependence on volatile oil earnings.
Analysts expect VAT collections to maintain a positive trajectory through the rest of 2026, supported by ongoing improvements in tax administration, digital transactions, and growth in productive sectors.
However, downside risks persist, including persistent inflationary pressures, high borrowing costs, and subdued consumer purchasing power, which could temper growth in subsequent quarters.
The latest NBS data reinforces the narrative of gradual economic diversification, with manufacturing and services sectors playing an increasingly central role in Nigeria’s revenue architecture.
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