Fresh concerns have emerged over Nigeria’s public finance system after the World Bank disclosed that more than N34.53 trillion generated by the country within three years was deducted before reaching the Federation Account.
The revelation, contained in the institution’s latest Nigeria Development Update, has intensified debate over transparency and accountability in the management of national revenue, especially at a time Nigerians continue to grapple with economic hardship despite sweeping fiscal reforms.
According to the report, Nigeria recorded a sharp increase in federation revenue between 2023 and 2025, largely driven by the removal of petrol subsidy and exchange rate reforms. Gross earnings reportedly rose from N17.08 trillion in 2023 to an estimated N37.44 trillion in 2025.
However, the World Bank said nearly 41 per cent of the total revenue generated within the period was deducted through “first-line charges” before funds were shared among the federal, state and local governments.
The deductions, which climbed from N6.22 trillion in 2023 to almost N15 trillion in 2025, were linked mainly to statutory allocations and cost-of-collection mechanisms controlled by major government agencies.
Among the agencies identified in the report were the Nigeria Customs Service, the Nigerian National Petroleum Company Limited and the Federal Inland Revenue Service.
The World Bank warned that the current arrangement weakens fiscal transparency because large portions of public revenue are spent outside the normal appropriation process and with limited legislative scrutiny.
The institution noted that although the country is earning more, the gains are not translating into stronger public spending or improved infrastructure. Capital expenditure reportedly declined from N5.5 trillion in 2024 to N4.5 trillion in 2025, while only about 25 per cent of approved capital projects were implemented.
At the same time, Nigeria’s fiscal deficit remained high at N16.9 trillion due to rising debt servicing obligations and recurrent expenditure.
Economic analysts say the findings expose deep structural weaknesses in the nation’s financial management system.
An economist at Covenant University, Yemisi Ayinde, described the trend as the emergence of a “parallel fiscal structure” that allows agencies to retain huge earnings outside direct parliamentary control.
He warned that unless reforms are introduced, rising revenues may continue to produce little impact on development and living conditions.
The World Bank also criticised delays in budget approvals and weak coordination between the executive and legislative arms of government, saying the pattern has repeatedly disrupted economic planning and implementation.
To address the challenge, the institution recommended sweeping reforms, including ending fixed-percentage allocations to agencies, reducing collection costs and channeling agency funding through the annual budget process subject to legislative approval.
The report concluded with a warning that failure to tighten fiscal controls could further shrink Nigeria’s development space despite ongoing economic reforms.
World Bank exposes massive revenue leakages threatening Nigeria’s fragile economic recovery
