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Building Tax Capacity in Nigeria: Lessons From The Sweden-Botswana Experience

Building Tax Capacity in Nigeria: Lessons From The Sweden-Botswana Experience

Oladiwura Eyitayo-Oyesode1

As Nigeria’s tax to GDP ratio hits rock bottom in the face of prevailing poor living conditions for majority of Nigerians, it behooves the Nigerian government to take effective steps towards reforming its tax system. This is because taxation remains the most sustainable means of achieving social and economic development the world over. In 2015, at the Financing for Development Conference in Addis-Ababa, political leaders agreed to the instrumentality of taxation as a viable means for fulfilling the Sustainable Development Goals before year 2030.2 The 17 Sustainable Development Goals (the SDGs) and 169 targets are universal goals aimed at promoting a safe, just and sustainable space for all human beings to thrive on the planet.3

The goals are all-encompassing as they touch on the economic, social and environmental dimensions of sustainable development. The goals aim to achieve the following:  eradicate poverty, end hunger, ensure good health and well-being, ensure quality education, achieve gender equality, ensure clean water and sanitation, ensure access to affordable and clean energy, promote decent work and economic growth, build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation, reduce inequalities within and among countries, make cities and human settlements inclusive, safe, resilient and sustainable, ensure sustainable consumption and production patterns, take urgent action to combat climate change and its impacts, conserve and sustainably use the oceans, seas and marine resources for sustainable development, Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss, promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels, and strengthen the means of implementation and revitalize the global partnership for sustainable development.4

The SDGs improve on the former Millennium Development Goals (the MDGs) which expired in 2015 and only touched on 8 areas.5 Clearly, the fulfillment of the SDGs would change the living conditions of every Nigerian, but the truth is, the change comes at a cost. The World Bank has estimated the revenue needed to fulfill the SDGs as $5 trillion to $7 trillion annually.6 For developing countries, the UNCTAD recognized a funding gap in the sum of $2.5 trillion annually.7

What is striking about the discussions on the means of financing the SDGs is the push for domestic resource mobilization as the most potent tool for actualizing the goals. Unlike the MDGs which were mainly funded through aid funds and debt relief8, the major means of financing the SDGs is domestic resource mobilization. According to the World Bank, between 50 to 80 percent of what is required to actualize the SDGs will come from domestic resources.9 The dependence on domestic resource mobilization is striking because most developing countries’ tax to GDP ratio are currently below the international benchmark of 15 percent needed to finance basic state functions. 10 The emphasis on domestic resource mobilization, however, stems from the research that shows that developing countries have the potential to increase their tax revenues,11 and also because taxation is the most sustainable way of actualizing the SDGs.12

What stands between the goals on paper and the actualization of these goals is the right steps that developing countries take in implementing them. To focus on Nigeria, I believe that the country might benefit from entering into a development cooperation agreement with a developed country as seen from the Sweden-Botswana experience. A development cooperation agreement in this case would be between a developed country and Nigeria aimed at improving Nigeria’s tax revenue collection capacity. The Sweden-Botswana development cooperation agreement which lasted for five years presents an experience from which Nigeria can learn from. The agreement was aimed at building capacity in Botswana’s tax administration. The project ensured ownership and sustainability through the style adopted by the partner countries. Each country contributed half of the project cost, hence each had a say in how the project was run. Rather than Sweden dictating to Botswana’s tax officials, it allowed Botswana’s tax officials to learn by working side-by-side with the Swedish officials.13 The agreement enabled the Botswana government to commit to investing for social and economic development in education, health care and infrastructure through an efficient structure for tax administration, thus moved up the ladder from being one of the poorest countries in the world to one of the richest in Africa.14 At the end of the agreement, Botswana now boasts of a higher tax to GDP ratio of about 23 percent15, which is much higher than the 15 percent needed to finance basic state functions.

Nigeria’s tax ratio to GDP is around 6 percent16, and is one of the lowest in the world, so it is important for the government to begin to explore effective means by which the country can improve its revenue potential to fund the SDGs. The IMF in its recent Report notes that building tax capacity in tax administration and targeted tax policy reforms must be pursued concurrently by the Nigerian government to increase Nigeria’s revenue potential.17

The IMF identifies two main sources of revenue leakages in Nigeria as high level of systemic non-compliance and the weaknesses of revenue administration systems and this is notwithstanding the on-gong efforts by the government to improve tax revenue. The IMF’s recommendations to the Nigerian government are:  to strengthen the large taxpayers’ offices, to implement large scale data analysis & cross matching, improve filing and payment compliance, improve integrity of tax officials, reform the VAT and the excise tax system to generate more revenue from the informal sector, rationalize tax incentives, and mobilize additional revenue at state and municipal levels.

In my view, the technicality of the areas identified by the IMF is sufficient reason why the Nigerian government should explore partnership with developed countries to build technical capacity for Nigeria’s tax officials. This partnership will also help to reform institutional issues, ensure accountability in all spheres and promote sustainability at the same time. Also, the learning-by-doing model will increase the efficiency of Nigerian tax officials and provide the opportunity to learn from the developed country’s experiences and adapt them to local circumstances. I also believe that partnering with a developed country to reform Nigeria’s tax system will help to identify and address other sources of revenue leakages through corruption and money laundering.

In conclusion, as Nigeria pursues its Economic Recovery and Growth Plan18 which expires in two years, it is important for the government to critically examine the mechanism being employed to fulfill the objectives of the plan. Partnership is a key tool that should be considered at this time to address systemic issues that limit Nigeria’s domestic revenue mobilization potential.


1 Oladiwura Eyitayo-Oyesode is in the first year of her doctoral program at the Schulich School of Law, Dalhousie University, Canada. She has a Masters degree in Law from Dalhousie University. She is qualified as a Barrister and Solicitor in Nigeria in 2014, and a brief stint in legal practice with Kayode Sofola & Associates before pursuing her graduate studies abroad.

2 United Nations, Third International Conference on Financing for Development, July 2015: Outcome.pdf

3 United Nations, Transforming our world: the 2030 Agenda for Sustainable Development:

4 To read more about the SDGs, see

5 World Bank Group, Transforming from the MDGs to the SDGs:

6 UNCTAD Annual Report 2017, So Much Done: So Much to Do

7 Ibid, see also From Billions to Trillions: Transforming Development Finance Post-2015 Financing for Development: Multilateral Development Finance Prepared jointly by African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank, International Monetary Fund and World Bank Group:

8 MDG Achievement Fund (MDG-F)

9 UNDP, Impact investment to close the SDG funding gap: SDGs-.html

10 World Bank Group, “Strengthening Domestic Resource Moving from Theory to Practice in  Low- and Middle-Income Countries”

11 See the Report To the G-20 Development Working Group by the Imf, Oecd, Un and World Bank “Supporting the Development of More Effective Tax Systems”:; see also the Reportsubmitted to the G20 Finance Ministers by the IMF, OECD, UN, and World Bank Group WBG, “Enhancing the Effectiveness of External Support in Building Tax Capacity in Developing Countries”:

12 See the Addis Ababa Action Agenda United Nations, 2015 supra note 1 at 10.

13 Based on the speech delivered by Mr Ken Morris, Commissioner General of Botswana’s Unified Revenue Service at the Stockholm Tax Conference – an international conference on tax capacity-building which held from 30th – 31st May 2018

14 African Natural Resources Centre: African Development Bank “Botswana’s Mineral Revenues, Expenditure and Savings Policy African Natural Resources Center African Development Bank a Case Study

15 Supra note 12.

16 IMF, “Mobilizing Tax Revenues in Nigeria: Options for Revenue Mobilization in Nigeria” IMF Country Report No. 18/64, March 2018 at 6.

17 Ibid

18 Ministry of Budget & National Planning, Economic Recovery & Growth Plan 2017-2020: