The International Monetary Fund (International Monetary Fund) has suggested that Nigeria may need to consider introducing excise duties on telecommunications services as part of broader efforts to strengthen government revenue mobilisation, even as the country’s telecoms sector continues to expand its contribution to economic growth and digital transformation.
The recommendation is contained in the IMF’s 2026 Article IV Consultation Report on Nigeria, which underscores the importance of sustained revenue mobilisation in creating fiscal space for development programmes and social spending.
According to the Fund, while ongoing tax reforms are expected to improve revenue collection, additional policy measures may be required over the medium term to strengthen public finances.
“Further tax policy changes will likely be needed—such as increasing the VAT rate, extending VAT to fuel products, rationalising tax expenditures, in particular VAT exemptions on extractive industries and some customs duties, and introducing telecoms excises—to complement administrative gains,” the IMF stated.
“Further tax policy changes will likely be needed—such as increasing the VAT rate, extending VAT to fuel products, rationalising tax expenditures, in particular VAT exemptions on extractive industries and some customs duties, and introducing telecoms excises—to complement administrative gains,” the IMF stated.
However, the IMF cautioned that any new tax measures should be implemented carefully, taking into account prevailing poverty and food insecurity challenges. The Fund stressed that reforms should be sequenced appropriately and supported by adequately funded social protection mechanisms, including cash transfer programmes.
“The timing of reforms,” according to the IMF, “should consider the poverty and food insecurity situation and ensure that the cash transfer system is in place and funded.”
Telecoms sector increasingly central to economic growth
The recommendation comes at a time when telecommunications has emerged as one of Nigeria’s most dynamic economic sectors, driven by rising demand for digital connectivity, broadband services and technology-enabled business activities.
In its assessment of Nigeria’s economic performance, the IMF identified information and communication as one of the key sectors supporting growth alongside agriculture, real estate, and oil and gas.
According to the report, “Growth was driven by agriculture, real estate, information and communication, and oil and gas.”
Industry growth has also been reflected in rising subscriber numbers. As of March 2026, Nigeria recorded 185.7 million active telecommunications subscriptions and 153.8 million internet users, according to NCC statistics.
The Fund further observed that the structure of the Nigerian economy is gradually shifting, with technology-related sectors accounting for an increasing share of national output.
“The GDP share of information/communication, trade, real estate, and manufacturing increased while the share of oil/gas and agriculture declined,” the IMF noted.
Recent industry data underscores the sector’s growing economic significance. According to figures published by the National Bureau of Statistics and the Nigerian Communications Commission, telecommunications contributed 8.12% to Nigeria’s real Gross Domestic Product (GDP) in the fourth quarter of 2025 and 8.3% for the full year.
Industry growth has also been reflected in rising subscriber numbers. As of March 2026, Nigeria recorded 185.7 million active telecommunications subscriptions and 153.8 million internet users, according to NCC statistics.
The expansion is being fuelled by increasing demand for broadband connectivity, streaming services, e-commerce platforms, fintech applications, digital payments, remote work solutions and other internet-enabled services.
As more Nigerians rely on digital platforms for communication, commerce, education and financial transactions, data consumption and internet adoption have continued to rise across the country.
Digitalisation seen as revenue collection tool
Beyond recommending potential telecoms excise duties, the IMF also highlighted the role of technology in strengthening government revenue administration.
According to the Fund, greater use of digital tools to track, verify and collect government revenues could help reduce leakages, improve compliance and mitigate corruption risks.
“Leveraging digitalisation to track, verify, and collect government revenues would reduce leakages and mitigate corruption vulnerabilities,” the IMF report stated.
The recommendation aligns with ongoing Federal Government efforts to modernise tax administration through digital platforms, including e-invoicing systems, fiscalisation initiatives and expanded tax identification programmes aimed at improving compliance and boosting revenue collection efficiency.
While the IMF’s proposal introduces the possibility of additional taxation on telecommunications services, it also highlights the sector’s growing strategic importance to Nigeria’s economy, where digital connectivity is increasingly serving as a foundation for economic activity, financial inclusion and broader digital transformation.
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