Tax, sovereignty and the risks of outsourcing state power

Nigeria’s recent tax cooperation agreement with France, facilitated through the Federal Inland Revenue Service (now the Nigeria Revenue Service), has been presented as technical assistance to modernise revenue administration.

On the surface, such cooperation appears benign. When a foreign state becomes embedded in the systems that determine how a country sees, measures, and taxes its own economy, the matter is no longer merely technical. It is political. It raises fundamental questions about sovereignty, data control, and the long-term independence of state institutions.

History counsels caution. France’s relationship with Africa has long extended beyond formal diplomacy into monetary arrangements, security partnerships, corporate dominance, and institutional influence. The architecture often described as ‘Françafrique’ shaped economic and political outcomes across several former colonies. The CFA franc system, for decades, constrained monetary autonomy across parts of West and Central Africa, with foreign reserve arrangements and limited policy space. While Nigeria does not share this colonial history with France, modern influence rarely requires direct colonial rule. Power today travels through standards, platforms, advisory frameworks, and institutional partnerships.

“Tax administration sits at the heart of state capacity. It determines what economic activity is legible to the state, how compliance is enforced, and how development priorities are funded.”

Tax administration sits at the heart of state capacity. It determines what economic activity is legible to the state, how compliance is enforced, and how development priorities are funded. In the digital age, tax systems also generate high-value economic intelligence: ownership structures, profit flows, sectoral vulnerabilities, and consumption patterns. Even when governments insist that no raw taxpayer data is shared, the architecture of systems, analytics models, compliance logic, and software design, shapes how the state understands its economy.

Data sovereignty is therefore not a slogan; it is a strategic asset. States that take sovereignty seriously retain control over the design and governance of these core systems. Nigeria should do the same.

This does not argue against learning from international best practice. It argues against institutional outsourcing. There is a material difference between benchmarking global standards and embedding foreign influence into the intelligence layer of national revenue systems. If cooperation is to be pursued, safeguards should be explicit: local ownership of system architecture and intellectual property; full data residency within Nigeria; open standards that prevent vendor lock-in; transparent oversight by the National Assembly; and time-bound capacity transfer that ensures foreign technical roles sunset as domestic capability deepens. Without such guardrails, “technical assistance” risks becoming structural dependence.

The opportunity cost of this arrangement is also significant. Nigeria is not short of technical capacity. The country’s fintech and digital infrastructure ecosystem, spanning payments, identity, data platforms, and enterprise systems, has produced globally competitive firms. Alongside capable public-sector technocrats and a deep diaspora talent pool, Nigeria possesses the ingredients to design and govern modern revenue systems domestically, drawing on multilateral technical support rather than bilateral institutional embedding. Prioritising domestic capability is not parochialism; it is how durable institutions are built.

There is, further, a geopolitical context. French influence across parts of the Sahel is being actively contested, with governments in Mali, Burkina Faso, and Niger reconfiguring security and political partnerships. These shifts reflect a broader reassessment of postcolonial power arrangements. For Nigeria, whose regional leadership depends on strategic credibility, embedding a foreign state into sensitive institutional infrastructure at such a moment warrants careful thought. Strategic partnerships should be aligned not only with technical convenience but also with long-term regional and institutional interests.

Equally concerning is the opacity surrounding the agreement. Public information on the scope of cooperation, data governance provisions, intellectual property rights, and exit clauses remains limited. Agreements involving national revenue architecture should not be concluded without parliamentary scrutiny and informed public debate. Transparency is not an obstacle to reform; it is a condition of legitimacy.

None of this is an argument for isolation. Nigeria’s revenue administration can and should learn from jurisdictions that have successfully modernised tax systems through digital platforms, risk-based compliance, and data-driven enforcement. But the locus of control must remain domestic. The purpose of cooperation should be to accelerate local capability, not substitute it.

At stake is more than revenue efficiency. Tax administration underpins state legitimacy, development planning, and democratic accountability. A state that cannot fully govern how it raises and analyses revenue weakens its capacity to govern everything else. History offers ample warning of the long-term costs of ceding economic levers under the guise of assistance. The lesson is not to reject cooperation, but to structure it on terms that strengthen sovereignty.

Nigeria’s development challenge is not a shortage of partners; it is the discipline of building institutions that endure. In matters of tax and data, sovereignty is not declared. It is designed, defended, and institutionalised through deliberate choices.

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