Nigeria’s Value Added Tax (VAT) collections reached a total of N1.56 trillion collected across various sectors in the second quarter of 2024.
This represented a 9.11% increase from the previous quarter, Q1 2024, where N1.43 trillion was collected.
This is according to the latest report by the National Bureau of Statistics (NBS), which highlights the dynamic nature of Nigeria’s economic landscape, where sectors such as manufacturing, information and communication, and mining and quarrying led the way in VAT contributions.
Manufacturing alone accounted for 11.78% of the total VAT collected, reaffirming its critical role in Nigeria’s economic development.
Similarly, the information and communication sector contributed 9.02%, driven by the rising demand for data services and digital infrastructure development.
The report also indicates notable growth in several sectors on a year-over-year basis. VAT collections increased by 99.82% compared to Q2 2023, with sectors such as human health and social work activities recording the highest growth rate of 98.44% quarter-on-quarter, followed closely by agriculture, forestry, and fishing, which grew by 70.26%.
On the flip side, some sectors faced declines, such as activities of households as employers, which dropped by 46.84%, and real estate activities, which decreased by 42.59%.
Below are the top 10 sectors that paid the most VAT in Nigeria in Q2 2024 according to data from the NBS:
10. Professional, Scientific, and Technical Activities
In Q2 2024, the Professional, Scientific, and Technical Activities sector contributed N10.39 billion in VAT, marking a 47% year-over-year growth from N7.07 billion in Q2 2023.
- Compared to the previous quarter, Q1 2024, which saw N9.62 billion, there was an 8% increase.
- The growth in this sector indicates a rise in demand for specialized services such as legal, engineering, and consulting, likely driven by Nigeria’s gradual economic recovery and increased foreign investments in infrastructure projects.
9. Administrative and Support Service Activities
The Administrative and Support Services sector contributed N13.29 billion in VAT in Q2 2024, reflecting a 122% increase year-over-year from N5.97 billion in Q2 2023.
- Quarter-over-quarter, this sector grew by 34%, up from N9.94 billion in Q1 2024.
- This significant increase could be attributed to a rise in demand for outsourcing services, including facilities management, human resource consulting, and office administrative services.
8. Transportation and Storage
The Transportation and Storage sector saw a VAT contribution of N23.01 billion in Q2 2024, which represents a 39% year-over-year increase from N16.54 billion in Q2 2023.
- However, compared to Q1 2024, the sector experienced a slight decline of 4%, down from N24.05 billion.
- The year-over-year growth signifies the increasing demand for logistics services, likely driven by the expansion of e-commerce and the need for improved supply chains in Nigeria.
- Yet, the sector continues to face numerous challenges, including poor road infrastructure, high operational costs due to rising fuel prices, and a lack of investment in modern transportation systems.
- These factors have likely contributed to a volatile growth pattern in recent quarters.
7. Other Service Activities
- Other Service Activities contributed N25.97 billion in VAT in Q2 2024, marking a 109% year-over-year increase from N12.42 billion in Q2 2023 and a 25% quarter-over-quarter growth from N20.83 billion in Q1 2024.
- Despite the increase, many small businesses within this sector operate informally, reducing their contribution to the economy and making regulatory oversight difficult.
6. Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles
- In Q2 2024, the Wholesale and Retail Trade sector contributed N50.04 billion in VAT, representing a 47% increase year-over-year from N34.10 billion in Q2 2023 and a 12% increase quarter-over-quarter from N44.72 billion in Q1 2024.
- The sector’s growth reflects Nigeria’s large and growing consumer base. However, challenges such as inflation and poor infrastructure continue to constrain growth.
5. Financial and Insurance Activities
The Financial and Insurance sector paid N82.55 billion in VAT in Q2 2024, marking a 44% increase year-over-year from N57.27 billion in Q2 2023 and a 26% quarter-over-quarter increase from N65.62 billion in Q1 2024.
- The sector’s growth is likely tied to the expansion of digital financial services, especially mobile banking and fintech solutions.
- However, this sector faces significant challenges, including regulatory hurdles, cybersecurity threats, and the impact of high inflation and interest rates, which limit borrowing and investment activities.
4. Public Administration and Defence, Compulsory Social Security
The Public Administration and Defence sector contributed N84.88 billion in VAT in Q2 2024, reflecting a remarkable 122% year-over-year increase from N38.17 billion in Q2 2023 and a 51% quarter-over-quarter increase from N56.12 billion in Q1 2024.
- This growth could be attributed to reforms in public sector spending and more efficient tax collection mechanisms.
- However, the sector continues to face significant challenges, including corruption, inefficiency, and budgetary constraints that hinder the full implementation of social programs and security initiatives.
3. Mining and Quarrying
The Mining and Quarrying sector paid N137.18 billion in VAT in Q2 2024, up by 155% year-over-year from N53.79 billion in Q2 2023 and 34% quarter-over-quarter from N102.24 billion in Q1 2024.
- This growth is indicative of the government’s efforts to diversify the economy by boosting the non-oil mining sector, particularly solid minerals.
- However, the sector faces several challenges, including illegal mining, underdeveloped infrastructure, and a lack of adequate investment in local refining capacities.
2. Information and Communication
The Information and Communication sector contributed N140.80 billion in VAT in Q2 2024, marking a 30% increase year-over-year from N108.48 billion in Q2 2023 and a 22% quarter-over-quarter increase from N115.55 billion in Q1 2024.
- The growth in this sector reflects the rapid expansion of telecom and internet services in Nigeria, driven by increased mobile phone penetration and the demand for data services. However, the sector is not without its challenges.
- High data costs, cybersecurity threats, regulatory uncertainty, and poor digital infrastructure continue to limit its potential.
1. Manufacturing
The Manufacturing sector paid the highest VAT in Q2 2024, contributing N183.89 billion. This marks a 21% increase year-over-year from N151.78 billion in Q2 2023 and a 4% quarter-over-quarter increase from N177.17 billion in Q1 2024.
- Manufacturing remains a critical sector for Nigeria’s economic growth, though it faces significant challenges, including high inflation, foreign exchange volatility, and inadequate infrastructure, particularly in power supply.
- These issues increase production costs, limit profitability, and make Nigerian products less competitive in the global market.
- The sector has also been impacted by the recent increase in fuel prices, which has raised logistics costs.