By Rita Amaechi | National News
The Minister of Finance and Coordinating Minister of the Economy, Prof. Taiwo Oyedele, has urged state governments to reduce their dependence on federal allocations, saying allocations alone cannot guarantee sustainable prosperity.
Oyedele made the call at the 2026 National Council on Finance and Economic Development (NACOFED) conference in Owerri, Imo State, where he advocated stronger fiscal federalism, improved internally generated revenue and economic diversification.
He said states must focus on developing their productive capacities and creating jobs rather than relying predominantly on monthly allocations from the Federation Account.
According to the minister, Nigeria’s economic reforms, particularly the removal of the petrol subsidy and the liberalisation of the foreign exchange market, have significantly increased the revenue available for distribution among the three tiers of government.
He disclosed that monthly Federation Account allocations, which stood between N300 billion and N600 billion before 2023, have risen to more than N2 trillion.
Oyedele said the reforms generated an estimated N15.8 trillion in savings between June 2023 and December 2025. Of the amount, the Federal Government received N5.43 trillion, states received N6.52 trillion, while local governments received N3.88 trillion.
However, he stressed that the N15.8 trillion should not be interpreted as money saved and retained by the Federal Government.
“The figures tell a financing story, not simply a savings story,” Oyedele said, explaining that the reforms reduced fiscal pressure and the amount of borrowing that would otherwise have been required.
He said the Federal Government generated an additional N20.4 trillion during the period through subsidy savings, increased revenues and borrowing, but its expenditure stood at N30.64 trillion.
The minister explained that the additional resources were deployed to meet critical obligations, including salaries, debt servicing, infrastructure development, electricity subsidies and other government programmes.
Oyedele disclosed that the Federal Government spent N9.39 trillion on wages during the period, while N9.37 trillion went into servicing external debt.
He added that N6.47 trillion was invested in strategic infrastructure covering transportation, housing, agriculture and security, while N3.14 trillion was spent on electricity subsidies to cushion consumers from the impact of higher tariffs.
The minister maintained that subsidy removal had reduced the country’s borrowing requirements but did not eliminate the need for borrowing because government revenues remained insufficient to fund total expenditure.
He said resources made available through the reforms had also supported salary increases, payment of salaries and pensions, settlement of pension arrears and gratuities, expansion of the Nigerian Education Loan Fund and affordable credit schemes for consumers and small and medium-sized businesses.
Among the major infrastructure projects he listed were the Lagos-Calabar Coastal Highway, with N2.23 trillion committed; Sokoto-Badagry Super Highway, N1.11 trillion; Trans-Sahara Super Highway, N489.2 billion; and the Road Emergency Intervention Project, N366 billion.
Oyedele urged states to build resilient and productive economies capable of generating revenue, attracting investment and creating employment.
He said Nigeria must move away from an allocation-dependent economy towards one driven by production, investment and job creation.
Meanwhile, the Director-General of the Debt Management Office, Patience Oniha, said the Federal Government’s loan arrangement with First Abu Dhabi Bank was part of efforts to diversify Nigeria’s funding sources and secure financing on more favourable terms.
Oniha said the transaction followed due process, received National Assembly approval and complied with relevant provisions of the Fiscal Responsibility Act.
Also speaking, Imo State Governor, Senator Hope Uzodimma, represented by his deputy, Dr Chinyere Ekomaru, said his administration was investing in agriculture, the digital economy, power and infrastructure as part of efforts to diversify the state’s economy.
Uzodimma urged other states to be deliberate in developing alternative economic sectors and reducing dependence on federal allocations.
Atiku Demands Accountability for Federation Revenues
Meanwhile, the Presidential Candidate of the African Democratic Congress, Atiku Abubakar, has challenged President Bola Tinubu’s administration to account for about N30 trillion in Federation revenues, deductions, savings and transfers.
Atiku, through his Senior Special Assistant on Public Communication, Phrank Shaibu, said recent Federation Account figures raised fresh questions about the management of revenues and fiscal gains arising from the removal of petroleum and energy subsidies.
He argued that Nigerians deserved a comprehensive reconciliation of revenues accruing to the Federation Account and deductions made before distribution.
Atiku said the July 2026 figures showed gross statutory revenue of N4.359 trillion, while the Federation Account Allocation Committee approved N3.007 trillion for distribution to the Federal Government, the 36 states and 774 local government councils.
He called on the Federal Government to provide greater transparency on how the revenues generated through the economic reforms have been deployed.
