By Michael Tidi

In a policy environment often dominated by rhetoric rather than measurable outcomes, the leadership of Zacch Adelabu Adedeji at the Federal Inland Revenue Service represents a notable institutional shift. What is unfolding is not a performative spectacle of reform, but a disciplined, technology driven reconfiguration of Nigeria’s fiscal architecture.

His appointment in 2023 by Bola Ahmed Tinubu reflects more than routine executive discretion. It illustrates a principle long emphasised in economic and institutional theory, that governance outcomes improve when technical competence is matched with responsibility. In this decision, one observes a deliberate alignment of expertise with a critical national mandate.

Drawing from my work as a legal practitioner and my Ph.D. in Economics, I offer this perspective from both analytical and institutional standpoints. Effective tax systems are not sustained by enforcement alone. They rest on legitimacy, administrative simplicity, and the rational expectations of economic agents. It is within this framework that the current reforms at FIRS must be understood.

For decades, Nigeria’s tax to GDP ratio has remained between 6 and 8 percent, significantly below the African average of approximately 16 percent. This persistent gap reflects not merely low productivity, but structural weaknesses in tax administration and the limited capture of economic activity. As Nicholas Kaldor observed, the effectiveness of a tax system is determined less by its statutory rates than by its reach. It is precisely this question of reach that Adedeji’s reform agenda confronts.

Recent performance indicators suggest not just improvement, but momentum. Following the ₦12.3 trillion recorded in 2023, collections rose to over ₦14 trillion in 2024, with 2025 figures trending higher, driven largely by sustained growth in non oil revenue streams. The composition of revenue is evolving in line with the classical insights of Richard Musgrave, who argued that durable fiscal systems must transition from resource dependence to broad based taxation.

Nigeria’s tax to GDP ratio, while still modest, is edging upward toward 10 percent, marking a meaningful structural shift. This movement signals that the constraint is no longer solely policy design, but increasingly administrative capacity and systemic efficiency.

At the centre of this transformation lies the strategic deployment of technology. The integration of Tax Identification Numbers with Bank Verification Numbers and National Identification Numbers has produced a unified fiscal identity architecture encompassing tens of millions of Nigerians. In practical terms, the informational opacity that once shielded large segments of economic activity is being systematically dismantled.

Equally significant is the digitisation of compliance. With over 80 percent of large taxpayers now filing electronically, and a steadily increasing share of small and medium enterprises entering the digital net, the cost of compliance has been materially reduced. This reflects the enduring insight of Joseph Schumpeter, who described the fiscal system as the “skeleton of the state,” shaped as much by administrative capacity as by economic structure.

The application of data analytics introduces a further layer of institutional sophistication. By transitioning toward risk based compliance models, FIRS is moving from reactive enforcement to predictive oversight. This approach aligns with contemporary tax systems globally, where information symmetry enhances efficiency and limits evasion.

Perhaps the most consequential outcome is the steady expansion of the tax base. Millions of previously unregistered taxpayers, particularly within the informal sector, are being integrated through simplified digital platforms. This development resonates with the work of Hernando de Soto, who emphasised that formalisation is central to economic visibility and state capacity.

Transparency and accountability have improved alongside revenue performance. Automated systems now generate verifiable audit trails, reducing administrative discretion and strengthening institutional trust. This represents more than technical progress. It reflects a gradual recalibration of the fiscal social contract.

What is being observed, therefore, is not a cyclical uptick in revenue, but the early stages of structural fiscal consolidation driven by administrative reform. The emphasis is shifting from extraction to efficiency, from enforcement to intelligent system design.

Challenges remain. The scale of informality, infrastructural constraints, and trust deficits continue to shape the pace of reform. Yet the trajectory is clear. Nigeria is moving, albeit gradually, toward a more modern and responsive fiscal system.

In the final analysis, the transformation at FIRS speaks to both institutional leadership and executive foresight. In appointing Adedeji, President Tinubu demonstrated a clear recognition that fiscal reform requires technical depth, policy clarity, and disciplined execution.

If sustained, these reforms hold the potential to move Nigeria into a new fiscal equilibrium, with tax to GDP ratios entering double digits and revenue streams becoming more stable and predictable. More fundamentally, they signal a transition toward a modern fiscal state, where technology, law, and economic policy converge to deliver efficiency, equity, and accountability.

This is not merely administrative reform. It is, in the classical economic sense, a restructuring of the fiscal foundation upon which long term development depends.

*Tidi, lawyer and economist focused on fiscal policy, taxation, and institutional development, writes from Abuja