By Our Correspondent
National News – Nigeria recorded a total of N84tn in federation revenue between 2023 and 2025, but about 41 per cent was deducted at source before distribution, according to findings from the World Bank.
The report revealed that federal, state, and local governments received significantly reduced allocations due to these pre-distribution deductions, raising concerns about fiscal sustainability.
The data showed that gross revenue increased from N17.08tn in 2023 to N29.45tn in 2024 and N37.44tn in 2025.
However, deductions also surged from N6.22tn to N14.93tn within the same period, amounting to N34.53tn in three years.
These deductions, primarily allocated to Ministries, Departments, and Agencies, are made before funds are shared by the Federation Account Allocation Committee.
The report explained that agencies such as the Nigerian National Petroleum Company Limited, Nigeria Customs Service, and other regulatory bodies receive statutory percentages from revenue collections.
This structure, while ensuring steady funding, has led to a situation where some agencies now receive more funds than several Nigerian states.
Why this matters is tied to Nigeria’s growing fiscal pressure, including a rising public debt estimated at over $110bn and a widening budget deficit.
The deductions reduce the funds available for infrastructure, healthcare, and education, limiting development across the country.
How the deductions grew faster than revenue is also notable.
While revenue rose by over 70 per cent between 2023 and 2024, deductions jumped by more than 115 per cent within the same period, highlighting a structural imbalance in revenue management.
Experts warn that this system creates a “pre-committed” revenue structure, where a large portion of national income is spent before it reaches government tiers.
Analysts have called for reforms to ensure transparency, suggesting that agencies should be funded through budgetary allocations rather than automatic deductions.
The World Bank recommends restructuring the framework to improve accountability and increase distributable revenue, which could enhance public investment and economic growth nationwide.
