Data consumption is driving VAT revenues in Nigeria, making it a crucial replacement for volatile oil income.
Every gigabyte of data Nigerians buy doesn’t just enrich telecom operators—it also fills government coffers.
With Value Added Tax (VAT) set at 7.5%, Nigeria’s surge in data consumption has become one of its most reliable income streams.
In 2024, VAT receipts from the information and communications sector rose 122.31% to ₦597.65 billion ($398.04 million), compared with ₦268.84 billion ($179.05 million) in 2022.
During the same period, national data usage nearly doubled to 973,455 terabytes.
Telecoms accounted for over 81% of the ICT sector’s ₦33.62 trillion ($22.39 billion) output, with data now eclipsing voice services as the main revenue driver.
Nigeria’s VAT collections have surged nearly 339% since 2020, reaching ₦6.72 trillion ($4.48 billion) in 2024—outpacing oil earnings. The government expects ₦6.95 trillion in VAT collections for 2025, rising above ₦9 trillion by 2027, with 50% going to states and 35% to local governments.
Despite proposals to raise VAT to 10%, the rate remains unchanged, as the government focuses on expanding coverage and efficiency.
“Until last year, we were doing under 10% [tax-to-GDP]. South Africa is doing 26%,” noted Taiwo Oyedele, Chair of the Presidential Committee on Fiscal Policy and Tax Reforms.
With smartphone penetration still below 50%, experts say more connections could supercharge VAT revenues. As MTN’s CEO Karl Toriola put it, “The demand for data in Nigeria is exceptional and will continue to grow.”