The World Bank has raised fresh alarm over Nigeria’s public finance system after revealing that more than N34.53 trillion generated by the country between 2023 and 2025 was deducted before reaching the Federation Account.
The disclosure has sparked renewed concerns over fiscal transparency and accountability, especially as millions of Nigerians continue to struggle with economic hardship despite repeated government assurances of rising national revenue.
According to the World Bank’s latest Nigeria Development Update, federation earnings increased significantly following major economic reforms, including the removal of petrol subsidy and exchange rate adjustments. Gross revenue reportedly climbed from N17.08 trillion in 2023 to about N37.44 trillion in 2025.
Despite the sharp increase, the institution said nearly 41 per cent of the total earnings within the three-year period was removed through “first-line charges” before funds were distributed to the federal, state and local governments.
The deductions reportedly rose from N6.22 trillion in 2023 to almost N15 trillion in 2025, with agencies such as the Nigerian National Petroleum Company Limited, the Nigeria Customs Service and the Federal Inland Revenue Service accounting for a large share of the retained funds.
The World Bank warned that the structure has created a troubling situation where rising revenues do not automatically translate into improved development spending.
According to the report, many of the agencies operate on fixed-percentage allocations tied directly to gross revenue, meaning their earnings increase automatically whenever government revenue rises.
The institution noted that while revenues expanded, Nigeria’s capital expenditure dropped from N5.5 trillion in 2024 to N4.5 trillion in 2025, with only a limited portion of approved infrastructure and development projects fully implemented.
Meanwhile, the country’s fiscal deficit remained high at N16.9 trillion due to growing debt servicing obligations and recurrent expenditure pressures.
Economic analysts say the findings expose longstanding weaknesses in Nigeria’s fiscal management framework.
An economist at Covenant University, Yemisi Ayinde, described the deductions as evidence of a fragmented financial structure that weakens parliamentary oversight and limits transparency in public spending.
He explained that systems originally introduced to support agency operations have gradually evolved into entrenched fiscal arrangements consuming large portions of national earnings outside the normal budget process.
Financial expert Uche Uwaleke also backed the World Bank’s concerns, saying the report validates repeated warnings by economists about persistent leakages within the Federation Account despite several reforms introduced over the years.
The report further criticised delays in budget approvals and poor coordination between the executive and legislative arms of government, warning that such challenges continue to undermine effective economic planning and implementation.
To address the growing concerns, the World Bank recommended sweeping reforms, including reducing collection costs, ending fixed-percentage allocations and ensuring agency expenditures pass through the formal budget approval process.
The institution warned that without urgent reforms, Nigeria may continue recording impressive revenue figures while struggling to deliver meaningful economic improvements and public services to citizens.