Prosper Okoye
Former minister Osita Chidoka has warned that a proposed change to Nigeria’s Value Added Tax (VAT) formula could sharply reduce allocations to South-East states.
In a post shared on his public WhatsApp channel, Chidoka highlighted that the South-East contributed ₦101.09 billion to VAT in 2024 but received ₦341.46 billion, a 338 percent return.
Join our WhatsApp ChannelHis post drew reactions, with some arguing that South Easterners, who own many businesses in other regions, were responsible for much of the VAT collected outside the region.
According to Ifedi Ezeala, the focus should be on the extent to which VAT generated in other regions is driven by South Easterners’ economic activities, rather than simply comparing regional contributions.
“What would have added real clarity is access to data showing VAT remittances by individual companies across the geopolitical zones, and if available, the ownership structure of those companies,” Ezeala said.
Chidoka stressed that VAT allocations are paid to states, not ethnic groups or individual traders, and noted that the system rewards states with strong economic structures and formalised transactions.
“Even if a South-Easterner creates value in Kano, Kaduna, Lagos, or Port Harcourt, VAT is recorded where the transaction is formalised and remitted — and VAT allocation is paid to states, not ethnic groups,” Chidoka wrote.
“VAT does not measure origin, ethnicity, or ownership of capital. It measures where value is booked, captured, and taxed.”
He cautioned that under the proposed VAT reform, which would distribute 60 percent according to derivation, 20 percent by equality, and 20 percent by population, the South-East’s allocation could fall from about ₦340 billion to roughly ₦220 billion.
Chidoka argued that production and formal consumption will matter more than redistribution under the new system, and urged the region to focus on industrialisation, infrastructure, power, logistics, and formalisation to increase VAT contributions.
Chidoka also outlined the 2024 VAT allocations for other regions, showing that the South-West contributed ₦3.11 trillion but received only ₦849.71 billion, the South-South contributed ₦1.08 trillion and received ₦543.49 billion, the North-West contributed ₦211.27 billion and received ₦574.32 billion, the North-East contributed ₦174.50 billion and received ₦411.84 billion, and the North-Central states contributed ₦154.54 billion and received ₦408.66 billion.
He emphasised that the South-East is a net beneficiary of redistribution, adding, “Presence is not production. Trading is not industrialisation. And VAT does not reward identity — it rewards structure.”
Other commentators have weighed in. Chinedu Nwono said in a public WhatsApp post that the arguments raised by Chidoka were being misunderstood and highlighted structural challenges facing the South-East.
“I have long refused to be fazed by some of these ‘emotive and all-motion-and-no-movement’ positionings that create villain perceptions about the SE region or South Easterners,” Nwono wrote.
He questioned why key industrial facilities, free trade zones, and rail infrastructure remain limited in the South-East, despite the presence of South-Eastern entrepreneurs in other regions.
“The potential for massive economic activity that will generate comparative VAT contribution still lies in the SE,” he added.
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Henry GGM added that comparisons between regions often ignore historical disadvantages facing the South-East.
“Most of the discussion around SE vs other regions is always about virtue-signalling… without laying aside some of the germane unfair disadvantage militating against SE growing up to their peers,” he wrote. He said unequal conditions across regions make direct comparisons misleading.
Prosper Okoye is a Correspondent and Research Writer at Prime Business Africa, a Nigerian journalist with experience in development reporting, public affairs, and policy-focused storytelling across Africa
