Manufacturing sector tops VAT contribution at 26.6% in H1’25

By Yinka Kolawole  

The manufacturing sector remained the top-contributing sector to Nigeria’s Value-added Tax (VAT) collections in the first half of 2025 (H1’25), with a contribution of N584.63 billion, representing 26.6 percent of the total local VAT collections of N2.197 trillion within the period, thus reaffirming the sector’s critical role in the country’s economic development.

Analysis of the latest data released by the National Bureau of Statistics (NBS) revealed that the aggregate VAT recorded in the first quarter of 2025 (Q1’25) stood at N2.061 trillion, with a breakdown showing that the total local VAT payments amounted to N1.102 trillion, foreign VAT contributed N454.76 billion, while the amount received via import VAT was N507.00 billion.

Similarly, the aggregate VAT recorded in the second quarter of 2025 (Q2’25) was N2.059 trillion, with a breakdown showing that total local VAT collections were N1.095 trillion, foreign VAT payments contributed N459.95 billion, while import VAT contributed N508.55 billion to the revenue.

This implies that the total non-import local VAT collections for the first half of the year (Q1 and Q2) amounted to N2.197 trillion, excluding non-import foreign VAT and Nigeria Customs Service (NCS) import VAT.

The NBS report revealed that the manufacturing sector was the largest contributor to VAT in Q1’25, followed by information and communication and mining and quarrying. The sector also remained the largest VAT contributor in Q2’25, also ahead of information and communication and mining and quarrying at 15.04 per cent.

Specifically on sectoral contributions, further analysis revealed that the sectors with the largest contribution to local VAT collections in Q1’25 were manufacturing at 26.03% (N286.95 billion); information and communication at 17.51% (N192.97 billion); and mining and quarrying at 17.02% (N187.59 billion). Also in Q2’25, the top three sectoral contributors were manufacturing at 27.19% (N297.68 billion), information and communication at 20.76% (N227.22 billion) and mining and quarrying at 15.04% (N164.70 billion). 

Despite facing many challenges, including high inflation, foreign exchange volatility, inadequate infrastructure, particularly in power supply, weakening purchasing power and backlog of unsold inventory which have resulted in increased production costs, limited profitability, and made Nigerian products less competitive in the global market, the manufacturing sector has remained a critical sector for Nigeria’s economic growth.

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