The Federal Government has granted tax waivers to Dangote Fertilisers, Mikano International Limited, and 103 other companies, raising the total number of beneficiaries under the Pioneer Status Incentive (PSI) scheme to 105 as of December 2024,
This development comes amid mounting concerns over the policy’s economic effectiveness and the government’s plan to phase out the current tax incentive regime in favour of a more targeted approach.
According to the latest PSI report released by the Nigerian Investment Promotion Commission (NIPC), 22 new companies were granted pioneer status in the last quarter of 2024.
This marks a notable increase from 83 beneficiaries recorded in the third quarter. However, it follows a fluctuating trend over the year — from 104 in the first quarter to 88 in the second, and 83 in the third.
Pioneer status exempts eligible firms from income tax for up to three years and is aimed at encouraging investments in sectors considered underdeveloped or non-existent in Nigeria. It is offered under the Industrial Development Income Tax Act.
Notable companies among the latest recipients include Sinotrucks West Africa Limited, Rain Oil Limited, JMG Nigeria Limited, Okpella Cement Plc, and Greenville Liquefied Natural Gas Company Limited.
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Others include Karma Agric Feeds and Foods Limited, Sifax Marine Limited, Flex Films Africa PVT Limited, and Royal Salt Industries Limited.
The report showed that these 107 companies invested a total of N2.53tn in various sectors, including manufacturing, pharmaceuticals, ICT, construction, and renewable energy.
Despite the scale of investment, the scheme continues to spark debate over its transparency and long-term impact. Tax experts and stakeholders have questioned the policy’s true economic benefits in the face of an estimated N8tn lost annually to tax waivers.
Speaking at the 2025 Tax Expenditure Workshop, the Executive Chairman of the Federal Inland Revenue Service, Zacch Adedeji, admitted that the government struggles to quantify the exact cost of these waivers due to weak data systems across relevant agencies.
“It has been argued that the government is losing revenue through tax incentives, which have been difficult to quantify due to limited data availability,” Adedeji said.
“In granting tax incentives, expected benefits must be weighed against socio-economic outcomes.”
The federal government, in response to these concerns, has proposed four new tax bills, including a shift from the PSI scheme to a new model known as the Economic Development Incentive (EDI).
The EDI aims to link tax relief directly to verifiable investments, focusing on priority sectors such as manufacturing, infrastructure, and services.
Chairman of the Presidential Tax Reform Committee, Taiwo Oyedele, explained that the EDI would impose minimum investment thresholds and tie benefits to actual economic outcomes. For example, companies in capital-intensive sectors would need to invest at least N200bn to qualify.
“The assets used during the pioneer period are essentially frozen in time,” Oyedele said. “They’re treated as if acquired after the incentive ends—meaning companies only start claiming deductions once the holiday period is over.”
However, legislative delays have stalled the implementation of the new incentive framework, leaving the current PSI structure in place for now.
Economic analysts continue to stress the importance of transparency and alignment with national development goals.
The CEO of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, noted that while tax waivers are essential to attract investment, the process must be fair and transparent.
“Incentives are not about immediate revenue,” Yusuf said. “They’re about stimulating the economy. If properly managed, they create jobs, boost production, and increase future tax revenue.”
As of Q4 2024, 213 PSI applications were still pending, while 14 companies received extensions to their tax holiday. Another 30 firms have submitted requests for renewals, and 89 new applications were received during the quarter.
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