Defence & Security Financing In Nigeria: Recent Developments

In response to increasing national security challenges and the need to strengthen Nigeria's defence capabilities, the Nigeria Tax Act, 2025 (No. 7) establishes a dedicated financing mechanism in the form a Defence and Security Infrastructure Fund (the "Fund"). The Fund is designed to support the implementation of national security initiatives, modernize defence infrastructure, and foster the development of the domestic defence industry. Amongst others, the Fund will ensure a predictable and sustainable source of funding for operational and strategic security needs across Nigeria.

Mechanics of the Fund

A. Funding Source

The funding source of the Fund is the Development Levy created under Section 59 of the Nigeria Tax Act, 2025. The Development Levy is a 4% tax imposed on the assessable profits of Nigerian companies, other than small companies and non-resident companies. Under the Nigeria Tax Act, 2025, ten percent (10%) of the aggregate funds attributable to