By Mike Abbah
Nigeria’s south-east region ranked lowest in the Value Added Tax (VAT) generation in the first quarter (Q1) of 2025, according to data by the Federation Account Allocation Committee (FAAC). The region is made up of Abia, Anambra, Ebonyi, Enugu and Imo states.
In the latest FAAC report, the south-east region generated a total of N28.38 billion in Q1 2025 to hit the bottom of the table among the six regions of the federation. Further disaggregation of the data revealed that Imo generated the least VAT among the five states in the region with a relatively paltry N2.34 billion.
Imo came behind Abia which recorded N2.92 billion immediately under Enugu with N4.92 billion. Ebonyi generated N7.43 billion to rank second under Anambra which topped the list with N10.73 billion.
According to the report, a total of N1.53 trillion was generated by the 36 states with the south-west recording the highest: N929.86 billion. The south-south region generated a total of N364.91 billion followed by the north-west region which recorded N68.05 billion during the period.
The north-central and north-east regions followed with N52.69 and N36.04 billion respectively.
The south-east’s poor performance in VAT collection reflects the degree of economic retrogression in the region which has a reputation for high level of economic activities.
The worst case is Imo. The FAAC reports showed that Imo climbed up a step in the first quarter of 2025 from its bottom position as the least performing state in Value Added Tax (VAT) collection as of 2024.
Imo notched up a step above Taraba after occupying the bottom of the table in 2024 as the worst performing territory in VAT collection among Nigeria’s 36 states.
In 2024, Imo recorded a relatively paltry N4.38 billion behind three states with the lowest figures – Abia N8.68 billion and Kebbi N8.77 billion. Imo was N4.30 billion, almost 50 percent, lower than Abia that it followed.
In Q1 2025, Imo narrowly escaped the bottom position – recording N2.34 billion against N2.33 billion collected by Boko Haram-ravaged Taraba which had achieved N32.37 billion to secure the 13th position in 2024 when Imo occupied the bottom of the table.
The poor performance of the south-east in VAT collection, is a matter for concern as the region is not known for economic backwardness compared to the Boko Haram-ravaged northern states.
Industry experts observe that VAT collection is majorly a reflection of the level of economic activities in the area in addition to other factors such as efficiency, inflation and investment
“If a state contributes little to the VAT pool, it suggests the area is economically feeble and less productive,” said Dr Desmond Agunze, an Economist.
According to Agunze, a state might generate low VAT due to several factors, including a weak economy, high inflation, and a focus on informal or counterfeit markets. Low aggregate consumption or demand due to these factors can also result in reduced VAT revenue.
Additionally, a state’s economic productivity, and the overall health of its business environment, play a significant role in VAT collection.
“A state with a struggling economy, high unemployment rate, or low purchasing power is less likely to generate high VAT revenue. Although, inflation plays a role as it erodes the value of money, making consumers less likely to spend and increasing the cost of goods and services, thus reducing VAT collection, it mirrors the actual level of productivity and economic activity,” Agunze said.
Industry analysts also posit that a state dominated by informal economy is likely to generate low VAT compared to those areas characterised by investment.
“A largely informal economy, often characterised by counterfeit goods and unregulated transactions, makes it difficult for authorities to accurately track and collect VAT,” Mojisola Akinremi, an agribusiness operator, said.
She noted that a state’s ability to attract investment and foster economic growth is crucial for generating VAT.
“Insecurity and a lack of confidence in the business environment can deter investment and negatively impact VAT revenue,” said Akinremi.
Imo has been notoriously referred to as the epicenter of insecurity among the South-East states, especially in the last six years, causing economic disaster and heightening unemployment. The food producing areas such as Oguta, Ohaji and Egbema have been reduced to barren lands despite being the state’s oil and gas bearing communities due to insecurity.
Media reports indicate that despite housing the largest natural gas reserves and significant crude oil deposits in Nigeria, Imo attracted zero foreign investment in four years, between 2020 and 2023, according to data by the NBS.
The NBS in its quarterly Capital Importation reports showed that, after recording the sum of $3 million in 2019, Imo had no dime to its name by way of investment inflow during the reference period.
The reports further revealed that Imo was the only oil-producing state in the south-east region that attracted no foreign investment for the four years under review, unlike its two counterparts – Anambra and Abia states which achieved a total of $51.48 million and $210.12 million, respectively.
The reports did not offer details of the investments to the states by sectors and products. However, Abia recorded the highest bulk of $150.09 million investment inflow in the third quarter of 2023, after the inauguration of Mr Alex Otti as the elected 4th governor of the state in May 2023.
Imo’s unimpressive situation is more worrying on the ground that the state is known for its largest natural gas reserves in the country and in West Africa, which is the source of commercial supplies to Lagos and other upcountry locations. Imo gas is also the major source for the Lagos Gas Company that feeds many companies, households and large establishments up to the Agbara industrial zone in Ogun State.
The spate of insecurity in the south-east is a source of grave concern as it is gradually pulling the region away from its position of high economic performance among the six regions of the federation.
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