FG Ends Revenue Collection Deductions to Boost Transparency and Fiscal Efficiency
In a major step toward fiscal reform, the Federal Government has scrapped the long-standing deductions made for revenue collection by key agencies, including the Federal Inland Revenue Service (FIRS), Nigerian Customs Service, and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced the decision in Abuja on Wednesday during a panel session following the launch of the World Bank’s October 2025 Nigeria Development Update (NDU) titled “From Policy to People: Bringing the Reform Gains Home.”
According to Edun, the move follows a directive from President Bola Tinubu to eliminate multiple deduction layers made before revenue sharing through the Federation Account Allocation Committee (FAAC). He explained that these deductions—often justified as “costs of collection”—had reduced distributable funds and blurred transparency in national revenue management. “Even during the last FAAC allocation, most of those deductions were removed once and for all,” Edun said, emphasizing that the reform aims to improve accountability and ensure more funds reach the federal, state, and local governments.
The finance minister described the initiative as part of a broader effort to strengthen fiscal discipline and restore confidence in government finances. He noted that the administration is reviewing all deductions, refunds, and interventions to ensure that “every naira collected is efficiently used for national development.” Edun added that the goal is a “much stronger fiscal situation” marked by transparency, efficiency, and accountability in public spending—key pillars for achieving long-term fiscal sustainability.
The World Bank, in its Nigeria Development Update, backed the move, noting that while Nigeria’s gross revenues have increased sharply—rising from about 5% of GDP in 2023 to 9.5% in 2025—a significant share had been lost to deductions. World Bank Lead Economist Samer Matta observed that much of this revenue went to administrative expenses and subnational refunds rather than development impact. The Bank commended Nigeria’s recent fiscal and monetary reforms, which have helped reduce the fiscal deficit to 2.5% of GDP and strengthened the country’s economic resilience despite softening global oil prices.
Edun also highlighted ongoing social and structural reforms to ensure that these fiscal gains translate into tangible benefits for citizens. He revealed that the government’s digital cash transfer programme has reached 10 million households, targeting 50 million Nigerians by year-end. Meanwhile, the National Economic Council has approved a ward-based development initiative across 8,809 wards to deliver reform dividends directly to communities. The World Bank projects that Nigeria’s economy will expand by 4.4% by 2027, supported by stronger agriculture, services, and industrial activity—marking a gradual but steady shift toward sustainable growth and improved fiscal governance.
source: punch