Nigeria's revenue challenge extends beyond legal frameworks into behavioural, informational and governance territory. The country's tax-to-GDP ratio stood at 8.2% in 2023, significantly below the African average of 16.1%, reflecting a persistent difficulty in converting economic activity into broad-based tax compliance. While the Nigeria Tax Act, 2025 and the Nigeria Tax Administration Act, 2025 were enacted to simplify and modernise the system, evidence indicates that compliance hinges not solely on legislation but on whether citizens understand the system, trust it and perceive tangible value in return.
Low awareness and weak taxpayer knowledge remain fundamental obstacles. Afrobarometer data show that 54% of Africans find it difficult to determine what taxes or fees they are supposed to pay, and research links such information gaps to weaker compliance attitudes. A 2023 study on personal income tax compliance in Nigeria identified lack of information, corruption and ineffective administration as key drivers of non-compliance. Separately, research on the informal sector in Ekiti State found that greater tax awareness significantly reduces tax evasion. Many citizens do not clearly understand what they owe, why they owe it or how to pay correctly.
The structure of Nigeria's labour market compounds the problem. The National Bureau of Statistics reported that 92.7% of employment was informal in the first quarter of 2024. Tax systems function best where incomes are visible, payrolls are structured, records are maintained and employer withholding mechanisms exist. Yet millions of Nigerians earn livelihoods as traders, artisans, transporters, freelancers, landlords and small service providers with irregular income and weak record-keeping. In this setting, non-compliance is often less about defiance and more about administrative invisibility, low tax identity and the absence of simple compliance pathways for those outside formal employment.
Distrust in government further erodes willingness to pay. Tax compliance strengthens where taxpayers believe revenue serves public purposes rather than private gain, but Nigerian survey evidence points to a weak fiscal social contract. Only 22% of Nigerian respondents told Afrobarometer they believed local government revenues were used for public services rather than private gain. Broader evidence across Africa shows that low trust in tax authorities and high perceived corruption weaken support for compliance. Many citizens do not view taxation as a reciprocal civic exchange but as extraction in a context where roads, schools, health facilities, water systems and security remain inadequate.
