By Emmanuel Nduka
The Nigerian Government has rejected claims that a large portion of the federation revenue is being diverted or hidden, insisting that recent interpretations of the World Bank’s Nigeria Development Update (NDU) are misleading and reflect a poor understanding of the country’s fiscal framework.
In a statement issued on Sunday, Nigeria’s Minister of State for Finance, Taiwo Oyedele, said commentaries suggesting widespread revenue diversion misrepresented the World Bank’s findings and wrongly portrayed legitimate fiscal deductions as waste.
The clarification follows concerns raised in the World Bank’s latest Nigeria Development Update, which noted that about ₦34.53 trillion was deducted from federation revenues between 2023 and 2025 through what it described as “pre-distribution deductions”. The report indicated that although total revenues rose significantly to about ₦84 trillion within the period, roughly 41 per cent did not make it into the Federation Account for sharing among the three tiers of government.
According to the World Bank, gross revenues increased from ₦17.08 trillion in 2023 to an estimated ₦37.44 trillion in 2025. However, “first-line charges”, including costs of collection and statutory transfers, also surged from ₦6.22 trillion to nearly ₦15 trillion, thereby reducing the distributable pool.
The global lender observed that this trend has created a paradox where rising revenues have not translated into stronger public spending capacity, as significant portions are retained by agencies before allocation. It added that while reforms such as fuel subsidy removal and foreign exchange adjustments boosted revenues, the gains were partly offset by the structure of deductions.
The report has since sparked reactions from civil society and political actors. ActionAid Nigeria called for an urgent forensic audit of the country’s revenue management system, warning that deductions exceeding 40 per cent of total revenue point to systemic weaknesses and pose risks to fiscal stability.
The group argued that the deductions largely tied to cost-of-collection frameworks and agency remittances, lack sufficient transparency, describing them as long-standing leakages that undermine development financing and deepen Nigeria’s fiscal constraints.
Similarly, the Labour Party’s 2023 presidential candidate, Peter Obi, expressed concern over what he described as massive revenue losses.
Reacting via his X handle, Obi noted that the ₦34.44 trillion reportedly not remitted to the Federation Account exceeds the combined capital expenditure in the 2024 and 2025 national budgets, underscoring what he called deep-rooted inefficiencies in public finance management.
However, Oyedele dismissed these concerns, stressing that the deductions cited in the report are legitimate and lawful fiscal allocations, not leakages or missing funds.
He explained that the deductions include statutory transfers, savings and investments, security expenditures, cost-of-collection charges, refunds to Ministries, Departments and Agencies (MDAs), as well as interventions benefiting state and local governments.
“It is important to emphasise that refunds and transfers to states and other tiers of government are not leakages,” he said. “They are legitimate fiscal flows, including repayments of obligations and statutorily backed allocations,” he added.
The minister further argued that critics selectively focused on historical data while ignoring ongoing reforms highlighted in the report. He pointed to recent policy measures, including an executive order aimed at strengthening petroleum revenue remittances, which are expected to improve transparency and increase distributable revenues by about 0.4 per cent of GDP annually.
“Misinterpreting one aspect of the analysis without acknowledging ongoing reforms gives a distorted picture,” he added.
Oyedele maintained that the broader message of the World Bank report is positive, noting that Nigeria’s economic growth is becoming more broad-based, inflation is gradually easing, and the country’s external position has strengthened with improved reserves and a current account surplus.
He also highlighted improvements in debt indicators, including a decline in the debt-to-GDP ratio for the first time in over a decade, attributing these gains to ongoing macroeconomic and fiscal reforms.
Reaffirming the government’s commitment to transparency and accountability, the minister urged stakeholders and the media to engage responsibly with fiscal data to avoid misinterpretations that could undermine public confidence.
