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On Wednesday, the Nigerian Federal Government introduced a comprehensive set of fiscal reforms aimed at halting capital erosion, minimizing investor uncertainty, and enhancing corporate tax benefits related to Value Added Tax (VAT) and capital expenditure. These initiatives are designed to boost profitability and foster greater investor trust within Nigeria’s economic landscape.
During the recent World Bank and International Monetary Fund (IMF) Annual Meetings held in Washington D.C., Sanyade Okoli, the President’s Special Adviser on Finance and the Economy, who stood in for the finance minister, elaborated on these reforms in a session tailored for investors. She underscored that the government’s renewed fiscal approach aims to establish a transparent, fair, and competitive environment for both domestic and international investors.
“Our policies now allow investors to offset their losses against gains, reducing their exposure to risk. Additionally, we have broadened corporate tax reliefs connected to VAT and capital investments to enhance overall returns,” Okoli explained. She noted that these reforms emerged from extensive dialogues with investors, resolving previous ambiguities and disputes surrounding capital gains tax.
“In response to investor feedback, we clarified the distinction between income and capital gains, settling earlier legal uncertainties. The tax system now incorporates a progressive structure that exempts small-scale investors and low-income earners, while ensuring that higher earners contribute equitably. Our objective is to create a balanced, transparent, and globally competitive tax framework that encourages investment and fairness,” she added.
Backing these statements, Mohammed Sadi Abdullahi, Deputy Governor responsible for Economic Policy at the Central Bank of Nigeria (CBN), confirmed that negotiations with fiscal authorities on capital gains tax reform are approaching completion. “We are in the final stages of discussions regarding adjustments to capital gains tax and will provide updates once decisions are finalized,” Abdullahi disclosed.
These announcements come amid investor apprehension following reports that Nigeria intends to increase the capital gains tax rate for foreign equity investors from 10% to 30% starting January, unless profits are reinvested in other Nigerian listed or unlisted equities. This proposed increase, part of a wider tax reform, has raised concerns about a possible sell-off on the Nigerian Stock Exchange, which has surged nearly 40% this year.
On the subject of Nigeria’s borrowing strategy, Abdullahi revealed plans to issue Eurobonds worth approximately $2.3 billion later this year. This issuance is intended to refinance a $1.18 billion Eurobond maturing in November, while also bolstering the nation’s foreign reserves and investor confidence. “We aim to structure the Eurobond offering to benefit both investors and the government, ensuring competitive pricing and responsible debt management,” he stated.
Abdullahi further emphasized that the investor forum serves as a vital platform to engage stakeholders ahead of the Eurobond launch, aligning expectations and reinforcing market confidence. “Our domestic borrowing program for the 2025 fiscal year is nearly fully subscribed. We value the trust investors have placed in Nigeria’s economic prospects. Depending on market conditions and expert advice, we plan to access international capital markets later this year,” he added.
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Regarding liquidity management, the CBN Deputy Governor explained that the recent Monetary Policy Committee (MPC) decision was prompted by data indicating a substantial inflow of public sector funds into the banking system. To address this, the MPC imposed a 75% Cash Reserve Ratio (CRR) on public sector deposits held outside the Treasury Single Account (non-TSA), aiming to stabilize the financial system and alleviate inflationary pressures.
“This targeted measure has effectively absorbed excess liquidity, reducing the frequency of Open Market Operations (OMOs). It has played a key role in controlling money supply growth and curbing inflation,” Abdullahi remarked.
Through these synchronized fiscal and monetary policies, the Nigerian government is striving to lower investment risks, enhance profitability, and reinforce macroeconomic stability, positioning the country as a compelling destination for global capital ahead of its forthcoming Eurobond issuance.