Revenue sacrifice or economic stimulus? FG’s N34trn waivers put fiscal strategy on spotlight

For a government struggling to raise enough revenue to fund infrastructure, service debt and meet its spending commitments, the revelation that import duty exemptions approved in 2025 were valued at about N34 trillion presents an uncomfortable question: how much revenue can Nigeria afford to give away in the name of economic incentives?

The figure is striking. It amounts to almost 62 percent of the N54.99 trillion 2025 federal budget and is nearly five times the N7.28 trillion collected by the Nigeria Customs Service (NCS) during the year.

The disclosure by Bashir Adeniyi, comptroller-general of customs, before the Senate Committee on Finance has consequently triggered questions about the rationale, beneficiaries and economic impact of the concessions.

Adeniyi, however, offered an important qualification. He said about 60 percent of the Import Duty Exemption Certificates (IDECs) approved in 2025 were for military hardware, reflecting the country’s security challenges.

“IDEC approvals reached about N34 trillion in 2025, 60 percent of which was rightly granted by government for military hardware procurements because of Nigeria’s prevailing security challenges,” he said.

That explanation has not ended the debate. Instead, it has raised a more fundamental question about how Nigeria measures the cost and benefits of tax expenditures.

Revenue versus incentives

The Federal Government’s argument is that waivers are not simply revenue giveaways. They are intended to stimulate investment, reduce production costs and support sectors considered important to the economy.

“There’s nothing bad about waivers. Waivers are meant to stimulate the economy. They are meant to improve manufacturing. If we have more industries working, we’ll have more people that will be employed, and the economy will be more viable,” Abdullahi Wada, national public relations officer of the NCS, said recently in Port Harcourt.

The logic is straightforward. The government forgoes some revenue today in the expectation that businesses will invest, produce more, employ more people and eventually generate greater economic activity and tax revenue.

But the policy becomes difficult to defend when the connection between the waiver and the promised economic outcome is unclear.

That is where critics have focused their attention.

“The country needs money for roads, power, education, healthcare, security and social protection, while also meeting obligations to creditors. At the same time, the government has struggled to meet its own revenue targets,” said a public policy analyst.

The Centre for Social Justice (CSJ) said the scale of the exemptions raises concerns about fiscal governance, particularly because the Federal Government’s consolidated revenue in 2025 was N28.23 trillion, below its N36.35 trillion target.

“The consolidated revenue accruing to the Federal Government in the 2025 financial year was N28.23 trillion out of a targeted N36.35 trillion. Comparing this with the value of customs duty waivers raises fundamental questions about sound fiscal governance and compliance with the Fiscal Responsibility Act,” the group said.

The comparison does not mean that N34 trillion in cash was directly lost from government coffers. The IDEC figure represents the value of imports covered by exemptions, not necessarily the customs revenue that would have been collected on all those imports.

That distinction is crucial. Yet the size of the figure still exposes the scale of government intervention in the import regime and the need for greater transparency over what is being exempted and why.

The local industry dilemma

The controversy also highlights a longstanding contradiction in Nigeria’s industrial policy.

The government wants to make investment easier, but domestic manufacturers also want protection from cheaper imported products.

The tension surfaced during the Senate hearing when Adams Oshiomhole, senator representing Edo North, questioned the decision to reduce import duties on some categories of vehicles.

His concern was that cheaper imported vehicles could weaken Nigeria’s automobile assembly industry and deepen dependence on imports.

For manufacturers, the difference between importing machinery and importing finished products is significant.

A waiver on production equipment can lower the cost of establishing or expanding a factory. A waiver on finished goods that compete with locally made products can do the opposite by making imports more competitive.

This is why analysts have called for more targeted incentives rather than broad concessions.

The question should not simply be whether an import is useful. It should be whether the exemption contributes to the government’s wider economic objectives.

The transparency question

The controversy ultimately comes down to accountability.

Who received the waivers? What goods were covered? How much revenue was actually forgone? How many jobs were created? Did beneficiaries increase local production? What happened to companies that failed to meet the conditions attached to their exemptions?

Without answers to these questions, the government is left asking Nigerians to accept the economic benefits of waivers without providing sufficient evidence of their returns.

This is particularly significant at a time when fiscal pressures are mounting.

Debt servicing, including sinking funds, consumed N12.63 trillion in 2025, while capital spending remained constrained. About 70 percent of the 2025 capital budget was rolled over into 2026 after releases to ministries, departments and agencies amounted to only N3.10 trillion.

The opportunity cost of tax exemptions therefore, becomes difficult to ignore. Every naira of revenue surrendered must ultimately be justified by the economic value it is expected to create.

A test for fiscal reform

The N34 trillion disclosure has consequently become more than a debate about customs. It is a test of how Nigeria intends to use tax policy to pursue economic growth while improving revenue mobilisation.

Waivers can be legitimate economic tools. They can support strategic investments, reduce the cost of productive inputs and help government respond to emergencies such as the country’s security crisis. But incentives work best when they are targeted, transparent and measurable.

Nigeria’s challenge is to ensure that waivers do not become permanent concessions with unclear beneficiaries and uncertain economic returns.

The government may not need to eliminate import incentives. It needs to demonstrate that every major concession has a purpose, a beneficiary, a measurable outcome and an expiry date.

Until that happens, the N34 trillion figure will continue to represent more than the value of exemptions approved in a single year.

It will remain a symbol of the difficult choice facing Nigeria’s fiscal managers: whether scarce public revenue should be collected today or surrendered in the hope of generating greater economic value tomorrow.