Press Statement: ActionAid Nigeria Condemns Institutionalised Revenue Erosion, Demands Accountability for ₦34 Trillion in Pre-Federation Account Deductions

For Immediate Release

ActionAid Nigeria Condemns Institutionalised Revenue Erosion, Demands Accountability for ₦34 Trillion in Pre-Federation Account Deductions.

Abuja, Nigeria | April 16, 2026 - ActionAid Nigeria expresses deep concern about recent World Bank findings that more than 40 per cent of Nigeria’s federal revenue in recent years has been deducted before distribution to federal, state and local governments. These findings reinforce long-standing concerns about Nigeria’s widening fiscal constraints, rising debt burden, and persistent challenges in public financial management.

In total, more than ₦34 trillion was deducted over the period under review. While Nigeria’s revenue has grown significantly in recent years, these deductions have risen sharply, significantly reducing the resources available for public investment at all levels of government. This widening gap between gross earnings and distributable revenue continues to constrain development financing and increase reliance on borrowing to sustain public expenditure.

ActionAid Nigeria notes that if a significant share of the estimated 41 per cent of revenue currently absorbed through deductions had been transparently accounted for and efficiently deployed, Nigeria’s dependence on borrowing could have been substantially reduced. This is particularly critical given International Monetary Fund projections that Nigeria’s debt-to-GDP ratio will rise to 33.1 per cent by 2027. The persistence of large-scale revenue leakages therefore represents both a governance failure and a missed opportunity to strengthen fiscal stability and curb debt accumulation.

These patterns reveal structural weaknesses in Nigeria’s public finance management system, in which substantial portions of revenue pass through complex, fragmented channels before reaching the Federation Account. This erodes fiscal space for all tiers of government, particularly state and local governments, which are closest to citizens yet increasingly constrained in delivering basic services.

ActionAid Nigeria is particularly concerned about the limited public disclosure of the composition, justification, and utilisation of these deductions. The opacity surrounding cost-of-collection frameworks, agency remittances, and other pre-distribution charges raises serious accountability concerns. There is also limited evidence of sustained scrutiny by subnational governments, further weakening fiscal oversight within the federation system.

Questions about transparency are further reinforced by ongoing concerns about the visibility of public expenditure, including capital projects such as the Nigeria Revenue Service (NRS) building, which was recently commissioned. As with many other public investments, the total project cost and procurement process remain unknown. Yet citizens have a right to full disclosure of how public funds are utilised.

Beyond fiscal implications, reduced public revenue also undermines the government’s ability to invest adequately in security, prevention systems, and community resilience. Combined with rising unemployment, poverty, and exclusion, this worsens insecurity and deepens cycles of crime, displacement, and social instability.

The Country Director of ActionAid Nigeria, Comrade Andrew Mamedu, noted that ‘‘For millions of Nigerians, the consequences are immediate and severe. At a time of rising inflation, declining purchasing power and widespread economic strain, the continued reduction of available public resources means fewer investments in essential services and limited support for vulnerable populations.’’

These pressures also weaken the state’s capacity to address insecurity. As livelihoods become more fragile and opportunities diminish, the conditions that drive crime, displacement and social unrest intensify, reinforcing a dangerous cycle of vulnerability and instability.

He added that these findings expose a deeply troubling reality about Nigeria’s public finance system. At a time when citizens are enduring significant economic hardship, it is unacceptable that such a large share of national revenue is lost through opaque processes. This is not just a fiscal issue; it is a matter of justice. Every naira that does not reach essential services denies Nigerians access to healthcare, education and dignity. The government must act decisively to reform these systems, ensure full public disclosure and prioritise citizens’ needs.

ActionAid Nigeria warns that the continued expansion of unchecked deductions poses a direct threat to equitable development, fiscal stability, and public trust. Without urgent reforms, Nigeria risks entrenching a system where public resources are consistently eroded before they can deliver meaningful impact, while citizens continue to bear the burden of declining services and rising hardship.

ActionAid Nigeria therefore recommends that the Federal Government urgently undertake a comprehensive and transparent review of all revenue deduction frameworks to ensure accountability, justification, and full public disclosure.

We further call for the immediate publication of detailed breakdowns of all deductions, strengthened independent oversight of all revenue-generating agencies, and urgent reforms to eliminate inefficiencies, opacity, and systemic leakages in public financial management.

ActionAid Nigeria also demands an independent forensic audit and public review of all deduction mechanisms to restore public confidence in fiscal governance and ensure that national resources are managed strictly in the public interest.

The National Assembly is urged to strengthen its constitutional oversight role through regular public hearings and rigorous scrutiny of deduction structures, their legal basis, and their developmental impact. Subnational governments must also play a more assertive role in demanding transparency and accountability within the federation’s revenue system, while civil society, the media, and citizens are encouraged to intensify independent scrutiny of public financial management. Nigeria’s development trajectory depends not only on revenue generation but, fundamentally, on the integrity, transparency, and equity with which public resources are governed, allocated, and deployed for the collective good.

ActionAid Nigeria calls on civil society organisations, the media, and citizens to remain vigilant and actively hold public office holders to account. We must collectively challenge and expose corruption, demand transparency, and resist all forms of mismanagement of public resources. 

#Signs

Andrew Mamedu, Country Director