Makinde's Economic Wizardry Propels Oyo to 2nd in VAT Contribution - GSM Advocates
Governor Seyi Makinde's administration has made history by ranking Oyo State 2nd in Nigeria's Value Added Tax (VAT) contribution in January 2026, surpassing oil-rich Rivers State and the Federal Capital Territory. This achievement is attributed to Makinde's effective economic policies, which have stimulated growth, improved infrastructure, and created a business-friendly environment.
Oyo State emerged as the second-highest state in terms of gross VAT allocation. It generated N67.18 billion in VAT and received N24.04 billion from the distribution pool. Although its contribution was far smaller than Lagos’, the state still ranked among the leading performers in VAT receipts.
Makinde's government has implemented initiatives like the Oluyole Free Trade Zone and Special Agro-Industrial Processing Zones, attracting investors and creating jobs. The state's 2026 budget, themed "Budget of Economic Expansion," focuses on infrastructure, education, and healthcare, with a total outlay of ₦891.99 billion.
The Oyo State government's efforts have boosted Internally Generated Revenue (IGR) by 145.5% since 2019, with a projected ₦100 billion IGR in 2026. Makinde's administration has also improved tax collection, expanded the tax net, and encouraged voluntary tax payment.
Oyo State’s rise in VAT contribution is driven by aggressive economic stimulation under Governor Seyi Makinde, which involved pumping ₦6.4 billion to ₦12 billion monthly into the state economy, resulting in over ₦77 billion to ₦143 billion annually in state workforce, boosting consumer spending and tax generation. Despite lacking seaports, the state became a major VAT contributor.
As of early 2025, Oyo State ranked third in VAT contribution, behind only Lagos and Rivers states, contributing ₦272.41 billion to the ₦3.11 trillion South-West total in the 2024 review period.
While Lagos remains the top contributor, Oyo State has emerged as a major economic hub, surpassing the collective VAT contributions of entire geopolitical zones like the North-West and North-East. The state government attributes this performance to increased commercial activities, improved infrastructure, and the timely payment of salaries and pensions.
"The consistency of these salaries and wages not only allows the over 130,000 government workers, the largest government workforce in the Southwest, to plan their lives, it also allows farmers and produce buyers to bring their foodstuffs to the markets on good roads and with sufficient confidence that they will sell out their goods"
Overall, the January 2026 data underscores the heavy concentration of VAT generation in a handful of economically active locations, particularly Lagos. At the same time, it highlights how Nigeria’s revenue-sharing structure pools VAT receipts at the federal level before redistributing them based on an agreed formula, resulting in noticeable differences between the amounts states generate and what they ultimately receive.