File photo | Logo of the World Bank Group, whose 2025 Global Findex report highlights record growth in formal saving and mobile-money use across developing countries. Nigeria’s federation revenues rose to N84tn over the past three years, but 41 per cent of these earnings was lost to pre-distribution deductions, significantly shrinking what is eventually shared among the three tiers of government, findings by the PUNCH have revealed.
Latest fiscal data obtained from the World Bank’s Nigeria Development Update, analysed by our correspondent on Tuesday, showed that total gross revenues climbed from N17.08tn in 2023 to N29.45tn in 2024 and N37.44tn in 2025, bringing cumulative earnings to N83.97tn within the period.
However, deductions from the Federation Account also surged from N6.22tn in 2023 to N13.38tn in 2024 and N14.93tn in 2025, amounting to a combined N34.53tn over the three years. This means that about 41.1 per cent of total revenues was deducted at source before distribution to the three tiers of government, reducing their share.
The development comes amid deepening fiscal pressure, a widening budget deficit, and a growing appetite for borrowing, which has significantly pushed Nigeria’s public debt to $110.3bn, equivalent to about N159.2tn as of 31 December 2025, raising concerns about sustainability and debt servicing capacity.
The World Bank in the report said this growing wave of first-line deductions from the Federation Account is quietly eroding the revenues available to federal, state, and local governments, despite a surge in overall earnings driven by recent economic reforms. In its latest Nigeria Development Update titled ‘Nigeria’s Tomorrow Must Start Today: The Case for Early Childhood Development’, the global lender warned that allocations to key government agencies now consume a significant portion of national revenues before they are even shared, effectively shrinking the fiscal space available for development.
A breakdown further shows that deductions accounted for 36.4 per cent of revenue in 2023, rose sharply to 45.4 per cent in 2024, and moderated slightly to 39.9 per cent in 2025. The data indicates that while revenues grew 72.4 per cent between 2023 and 2024, and 27.1 per cent between 2024 and 2025, deductions increased even faster, jumping 115.1 per cent between 2023 and 2024, and 11.6 per cent between 2024 and 2025.
The increase in deductions was largely driven by higher transfers to Ministries, Departments and Agencies funded through fixed percentages of gross revenue collections. These agencies include the Nigerian Upstream Petroleum Regulatory Commission, Nigerian Midstream and Downstream Petroleum Regulatory Authority, Nigeria Customs Service, Nigerian National Petroleum Company Limited, and others.
The report noted that by 2025, some of these deductions had grown so large that individual agencies were receiving more funds than several Nigerian states. The World Bank noted that while Nigeria’s revenue performance has improved following the removal of the petrol subsidy and foreign exchange reforms, the structure of deductions means that much of the gains are automatically diverted.
The report stated, “Large FAAC deductions to MDAs significantly reduce net revenues available to the federation. “FAAC first-line deductions to federal MDAs have increased sharply, reducing net distributable revenues and altering the balance of fiscal resources across the federation.” An analysis of the data showed that total deductions rose from N6.22tn in 2023 to N13.38tn in 2024, representing a sharp 115 per cent increase, before climbing further to N14.93tn in 2025, an additional 11.6 per cent rise.
Within this, transfers to MDAs for the cost of collection and refunds surged from N1.88tn in 2023 to N4.18tn in 2025, more than doubling over the period. Refunds to subnational governments and other statutory obligations also spiked significantly, jumping from N1.52tn in 2023 to N6.87tn in 2024, before moderating to N4.57tn in 2025.