FOR Nigeria, rising revenues have come with rising obligations. The latest World Bank Nigeria Development Update underscores this paradox. Even as macroeconomic reforms gather pace under President Bola Tinubu, the growing scale of deductions from Federation Account receipts continues to dilute the gains.
According to the World Bank, gross revenues climbed sharply to N84 trillion between 2023 and 2025. Yet as much as 41 per cent was absorbed by pre-distribution deductions, significantly shrinking what is ultimately shared among the three tiers of government.
This has fuelled concerns among analysts, who describe the trend as opaque, excessive, and tantamount to “hidden spending.”
The numbers are telling. Gross revenues rose from N17.08 trillion in 2023 to N29.45 trillion in 2024 and N37.44 trillion in 2025. Over the same period, deductions surged from N6.22 trillion to N13.38 trillion and N14.93 trillion, respectively, totalling N34.53 trillion in three years.
The World Bank’s concern is that in 2025, transfers funded through these deductions exceeded the total revenues of many states, with some agencies receiving more than the average state’s entire income.
Even more troubling, these deductions outstripped federal spending in key social and economic sectors, constraining investment in infrastructure and development.
To be sure, the Federal Government disputes the more alarmist interpretations. The Minister of State for Finance, Taiwo Oyedele, argues that the narrative misses a critical point that many of the deductions are legitimate, covering statutory transfers, security expenditures, cost-of-collection charges, and interventions that ultimately benefit subnational governments.
More importantly, Oyedele points to recent reforms. The Executive Order on petroleum revenue remittances and related measures, he notes, are already tightening leakages and improving fiscal discipline.
Crucially, these reforms are expected to boost distributable revenues by about 0.4 per cent of GDP annually while enhancing transparency across the system.
This defence deserves consideration. Not all deductions are wasteful, and some reflect structural features of Nigeria’s fiscal architecture. However, legitimacy does not negate the central issue around transparency and accountability.
At a time when Nigeria’s public debt has ballooned to over N159 trillion, fiscal opacity is no longer sustainable. The country faces mounting debt service pressures, widening deficits, and an increasing reliance on borrowing. Every naira diverted before FAAC distribution must therefore be fully justified, traceable, and subject to public scrutiny.
The trend in deductions also raises efficiency concerns. While revenues grew by over 70 per cent between 2023 and 2024, deductions rose even faster, jumping by more than 115 per cent in the same period. Although the pace moderated in 2025, the structural imbalance remains.
A significant driver of this pattern is the practice of funding key agencies directly from gross revenues through statutory allocations.
Institutions such as the Nigerian Upstream Petroleum Regulatory Commission, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the Nigeria Customs Service, and the Nigerian National Petroleum Company Limited receive fixed percentages of collections outside the annual appropriation framework.
This approach weakens legislative oversight and fragments fiscal accountability. It inflates the cost of revenue collection, which rose markedly over the review period. In a resource-constrained environment, this is difficult to justify.
The way forward is clear. First, all government revenues should, as much as possible, be routed through the Treasury Single Account to ensure visibility and control.
Second, the funding of MDAs should be subjected strictly to the budgetary process and the National Assembly appropriation.
Third, the cost of collection must be rationalised to reflect efficiency, not entitlement.
Ultimately, the issue is not whether Nigeria is earning more; it is whether it is managing those earnings prudently.
Oyedele’s reforms signal a step in the right direction, but implementation will be the true test.
More revenue should translate to more development, not more opacity. Without transparency, discipline, and accountability, higher earnings will continue to yield limited public value.
