IN SHORT: The Alliance for Economic Research and Ethics, a Nigerian think tank, has formally criticised the IMF’s 2026 Article IV Consultation recommendations for Nigeria, which include introducing excise duties on telecommunications services and extending VAT to fuel products, warning that the measures could worsen Nigeria’s cost of living pressures and described the IMF’s approach as reaching into a well-worn bag of fiscal tricks. The IMF projects its recommended measures could generate an additional 3.9% of GDP in revenue within three years, alongside 3.1% from administrative reforms. The Alliance argued the social and economic consequences of the IMF’s lethal prescription could prove counterproductive at a time when Nigeria’s inflation remains elevated and household incomes are under severe pressure.
The IMF’s prescription for Nigeria to increase telecom excise duties and extend VAT to petroleum products faces a co-ordinated pushback from Nigerian economists who argue that taxing the two most economically penetrated sectors of the Nigerian economy, mobile communications and energy, at a moment of persistent inflation and household income pressure would impose the cost of fiscal consolidation disproportionately on the citizens least able to bear it. The Alliance for Economic Research and Ethics’ June 15 statement is the most detailed Nigerian institutional critique yet of the Article IV recommendations and raises specific concerns about the sequence and targeting of fiscal measures that the IMF typically presents as technically neutral.
- The IMF’s Article IV Consultation Report for Nigeria, the annual economic health check that the fund conducts for member countries, identified Nigeria’s tax-to-GDP ratio as a critical vulnerability. At 8.2% in 2023, Nigeria’s revenue collection as a share of GDP remains significantly below the African average of 16.1% and the IMF’s recommended minimum of 15% for countries with Nigeria’s level of development spending needs. The gap is real and the revenue challenge is genuine: Nigeria cannot fund the health, education and infrastructure investment its 220 million people require from a revenue base this narrow.
- The IMF’s specific recommendations include introducing excise duties on telecommunications services and extending VAT coverage to fuel products, two interventions that address real tax policy gaps. Nigeria currently exempts petroleum products from VAT, a legacy of the fuel subsidy era that was partly justified by the social protection rationale for cheap fuel. With fuel subsidies now removed, the argument for VAT exemption on petroleum products is weaker. Similarly, telecom services in many comparable economies carry excise duties that Nigeria has historically avoided imposing.
- The Alliance’s counter-argument is not that the revenue targets are wrong but that the specific instruments are poorly timed and poorly targeted. A telecom excise duty would fall on every Nigerian who uses a mobile phone, which at 220 million registered subscribers is essentially the entire adult population. Mobile data and voice services are not luxury goods in Nigeria: they are the primary means of financial access, market information, small business management and social communication for the majority of the population. Taxing them imposes a fixed-cost burden that is proportionally heavier for lower-income users who spend a higher share of income on connectivity.
- The fuel VAT extension creates a similar distributional concern. Fuel in Nigeria is not primarily a luxury good consumed by the wealthy. It is the input cost for commercial transport, the power source for the 43% of Nigerians who rely on generators for electricity, and the operational input for food distribution, agricultural logistics and manufacturing. A VAT extension would flow through to consumer prices in every sector of the economy, producing inflationary pressure at a moment when the CBN has been working to bring inflation down from its 2024 peak.
- The IMF’s defence of the recommendations is the revenue projection: 3.9% of GDP in additional revenue within three years from tax policy reforms, plus 3.1% from administrative improvements. If achieved, this would roughly double Nigeria’s tax-to-GDP ratio and create the fiscal space needed for social spending, infrastructure investment and debt service without dependence on oil revenues. The fund projects these measures would improve Nigeria’s macroeconomic fundamentals, not worsen them.
- The substantive policy question is sequencing. Nigeria has just completed three of the most disruptive years of economic reform in its history: fuel subsidy removal, FX unification and monetary policy tightening. The social cost of those reforms fell disproportionately on households, producing the cost-of-living crisis that the Alliance is referencing. Introducing new consumption taxes on fuel and telecom services at the end of that adjustment period, before the recovery benefits have reached ordinary households, compounds the burden rather than spreading it.
The Alliance’s criticism connects to a broader African debate about the IMF’s approach to revenue mobilisation in low-income countries. The fund’s revenue recommendations tend to favour broadening the tax base through consumption taxes (VAT, excise duties) because these are administratively simpler to collect than corporate or wealth taxes. But consumption taxes are inherently regressive: they take a higher percentage of income from lower-income households than from wealthier ones. In a country as unequal as Nigeria, the choice of which taxes to raise is not technically neutral. It is a distributional choice that has political economy consequences.
The Bigger Picture: Nigeria’s tax-to-GDP ratio needs to rise. The Alliance for Economic Research and Ethics agrees on that diagnosis. The disagreement is about how to do it without repeating the pattern of economic adjustment that transfers the cost of stabilisation from the institutions that caused the problems to the households least equipped to absorb them. The IMF’s telecom and fuel tax recommendations are technically defensible. The Alliance’s concern about timing and distributional impact is politically legitimate. Nigeria’s Finance Minister Taiwo Oyedele, who helped the UK-Nigeria Growth Programme connect capital market development to economic reform, is the figure who will ultimately determine which set of considerations prevails in Nigeria’s 2026/27 Medium-Term Revenue Strategy.
Source: Nairametrics, June 15 2026
