Manufacturing’s VAT contribution up 39% to N803.5bn 

•Remains top contributor in 4yrs

By Yinka Kolawole 

The contribution of Nigeria’s manufacturing sector to Value-added Tax (VAT) increased by 38.93 percent to N803.5 3 billion in 2024 compared compared to the N578.39 billion recorded in 2023.

Data obtained from the National Bureau of Statistics (NBS) also shows that despite its declining output, the nation’s manufacturing sector has remained the top contributor to VAT in the last four years. The manufacturing sector’s contribution to VAT in 2023 was 15.9 percent; N477.43 billion in 2022 or 19%; and N194.1 billion or 30.9% of total VAT collections.

Specifically, in Q4’24, the manufacturing sector contributed N237.5 billion, representing 25.89 percent of total VAT collections; N395.34 billion in Q3’24 or 22.21 percent; N183.89 billion or 11.78 percent in Q2’24; and N177.17 billion in Q1’24 or 26.72 percent. 

The manufacturing sector accounted for 29.65% of the total VAT collected in Q1’23; 29.64% tin Q2’23; N251.3 billion or 26.51 percent in Q3’23; and N158.9 billion or 13.24% in Q4’23.

In Q1’22, the sector contributed N193.3 billion or 32.84 percent; in Q2’22, N118.8 billion or 33.08 percent; in Q3’22, N114.37 billion or 18.29%; and N131.3 billion or 32.17 percent in Q4’22.

The manufacturing sector was also the top contributor with N49.41 billion in Q1’21 or 9.95 percent; N49.41 billion or 8.76 percent in Q2’21; N91.2 billion, representing 30.9% of total VAT in Q3’21; and N102.9 billion or 30.86 percent in Q4’21.

The NBS data reveals that manufacturing remains a critical sector for Nigeria’s economic growth, though it faces significant challenges, including high inflation, foreign exchange (FX) volatility, and inadequate infrastructure, particularly in power supply.

These issues result in increased production costs, limited profitability, and make Nigerian products less competitive in the global market. The sector has also been impacted by the increase in fuel prices, which has raised logistics costs.

The obstacles have caused several local and foreign-owned manufacturers to downsize or completely close their businesses, with their increased VAT liabilities despite the challenging economic environment which has put extra pressure on the already strained sector.

According to economic analysts, the increase in VAT payments is as a result of the rising prices and currency devaluation rather than from industry expansion.

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