Nigeria’s Federal Government has rejected claims of revenue diversion from the Federation Account, saying all deductions are lawful and part of structured fiscal operations.
The clarification came on Monday through the Minister of State for Finance, Taiwo Oyedele, who addressed concerns linked to a recent World Bank analysis.
He said public interpretations suggesting missing funds are inaccurate and based on misunderstanding of how the Federation Account Allocation Committee (FAAC) operates.
“These interpretations misrepresent the World Bank’s analysis and reflect a misunderstanding of the fiscal system,” Oyedele said.
“Categorising FAAC deductions as waste or missing funds is factually incorrect.”
He explained that FAAC deductions include statutory transfers, savings, and security-related spending, all backed by existing fiscal laws.
“The figures cited cover lawful fiscal activities, including investments, cost-of-collection charges, and refunds to MDAs,” he added.
Meanwhile, the government said some reports ignored recent improvements in Nigeria’s public financial system, creating a distorted narrative.
It added that transfers to states and other tiers are not hidden deductions but legitimate allocations within the fiscal framework.
Government Explains FAAC Structure And Legal Deductions
The Federation Account pools revenues from oil, taxes, and other sources, which are then shared monthly among federal, state, and local governments.
According to Oyedele, deductions occur before distribution to settle obligations like collection costs and approved expenditures.
“Refunds and transfers are lawful repayments, not illegal deductions,” he said.
Furthermore, he explained that targeted interventions also form part of these deductions, especially those supporting sub-national governments.
“These mechanisms are essential to ensure fiscal balance and service delivery across all tiers,” he added.
The minister said critics relied on outdated data while ignoring reforms already implemented in early 2026.
He pointed to a new Executive Order on petroleum revenue remittance, expected to increase distributable income by about 0.4% of GDP annually.
“The World Bank itself acknowledges that these reforms are improving transparency,” Oyedele stated.
World Bank Report Signals Economic Improvement
The government said the overall message of the World Bank report is positive, contrary to alarmist interpretations.
It cited signs of broader economic growth across sectors and gradual easing of inflation pressures.
“Inflation remains elevated but is easing due to deliberate policy actions,” the statement said.
Nigeria’s external position has also improved, with stronger reserves and a current account surplus.
Meanwhile, the country recorded a drop in its debt-to-GDP ratio for the first time in over a decade.
“The World Bank does not conclude that Nigeria’s fiscal system is collapsing,” Oyedele said.
“It clearly states that reforms are working and must be sustained.”
The government warned that selective reporting could weaken public confidence in ongoing economic adjustments.
It called on media and stakeholders to present fiscal data accurately and responsibly.
“An accurate understanding of fiscal information is critical to maintaining confidence in Nigeria’s reform trajectory,” the statement added.
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