BY Musa Ilallah
World Bank flags hidden spending system diverting 41% of Nigeria’s earnings”, a news item by News Scroll”, an online publication of Wednesday 15th April 2026, did a damning story worth appearing in the Guiness book of records, on the Tinubu administration of its handling of the country’s revenue earnings.
It is not in doubt that the World Bank report on the alleged diversion of 41% of the country’s earnings since 2023, had brought to the fore what many Nigerians suspected since President Tinubu was sworn in as President on May 29, 2023.
A number of reasons can be put forward to substantiate the widely held belief that Nigeria’s resources were either being misappropriated or outrightly stolen by the administration as the World Bank report stated. Some of the reasons are not far fetched.
Despite a skyrocketing increase in revenue generation, the country has continued to witness an almost monthly increase in external and internal loans imposed on Nigerians by the current government. Moreso, some MDAs have gone public with failure of the Tinubu administration to fully fund their 2025 budgets.
Here’s how MDAs were funded in Nigeria’s 2025 budget based on the latest figures:
From the total 2025 capital budget of ₦23.96 trillion, MDAs’ capital allocation was ₦12.39 trillion but only 30% of capital budget of ₦7.19 trillion was released..
However, 70% of 2025 capital projects will serve as foundation for 2026 budget as roll over.
Nigeria’s federation revenue has seen a massive surge to N84tn over the last three years, yet a staggering 41% of these earnings never reached the federation account for distribution according to the report.
New data from the World Bank’s Nigeria Development Update reveals that pre-distribution deductions have significantly thinned the purse shared among federal, state, and local governments.
While gross revenues climbed from N17.08tn in 2023 to an estimated N37.44tn by 2025, the amount siphoned for “first-line” deductions followed an even steeper trajectory. “These deductions jumped from N6.22tn in 2023 to nearly N15tn in 2025, effectively removing N34.53tn from the reach of the three tiers of government before they could even sit at the table”, said the World Bank.
This fiscal trend is creating a paradoxical situation where the country is earning more but spending less on actual development. World Bank notes that while economic reforms like the removal of the petrol subsidy and forex adjustments boosted nominal revenue, the current system automatically diverts these gains to various agencies.
By 2025, the scale of these deductions became so massive that several individual government agencies received more funding than the total revenue of many Nigerian states.
These transfers often exceeded the entire budget allocations for major social and growth-oriented federal ministries, leaving infrastructure and essential services underfunded.
The lion’s share of these deductions is driven by cost-of-collection charges and statutory transfers to agencies such as the Nigeria Customs Service, the Nigerian National Petroleum Company Limited, and the Federal Inland Revenue Service.
Since these agencies are funded through fixed percentages of gross revenue, every increase in national earnings triggers a proportional windfall for them, regardless of their actual budgetary needs. This “pro-cyclical” funding model has come under fire for being high compared to peer countries and for operating as a parallel spending structure that bypasses traditional legislative oversight and budget discipline.
The impact on the ground is visible in the declining capital expenditure, which dropped from N5.5tn in 2024 to N4.5tn in 2025, with only a quarter of the approved budget actually implemented.
Meanwhile, the federal fiscal deficit remains high at N16.9tn due to rising debt servicing costs and recurrent spending. A Development economist, Aliyu Ilias warns that this practice of allowing agencies to access revenue directly at the source creates room for unaccounted spending. He argues that the current framework undermines fiscal transparency and suggests that 41% is far too high a price to pay for revenue collection, calling for a return to a more structured fiscal policy.
To fix this shrinking fiscal space, the World Bank is advocating for a complete overhaul of the revenue retention framework. The global lender recommends transitioning all agency funding to transparent budget appropriations that must be debated and approved by the legislature annually.
By phasing out fixed-percentage deductions and lowering cost-of-collection rates, the government could immediately boost the net funds available in the Federation Account.
Without such reforms, experts warn that Nigeria risks a deepening fiscal crisis where institutional interests continue to outweigh national development priorities.
In his reaction to the World Bank report, Former vice president Atiku Abubakar criticised Nigeria’s financial opacity and systemic corruption as revealed in the World Bank report. A statement by his media aide, Phrank Shaibu, Atiku argued that excessive revenue deductions hindered governance, leading to economic decline and citizen suffering and called for urgent reforms to ensure transparency and accountability in Nigeria’s fiscal management. Atiku Abubakar noted that the development was deeply troubling and unacceptable.
Atiku knocks Tinubu over Nigeria’s earnings He stressed that Nigeria is earning more revenue today, yet the citizens are receiving less benefit from it. This contradiction points not just to inefficiency, but to a system vulnerable to abuse, leakage, and the possible diversion of public funds.
The report confirms what many Nigerians have long suspected: that the administration of Bola Ahmed Tinubu operates an opaque financial structure that enables systemic corruption. He noted that excessive deductions from national revenue, before distribution through the Federation Account, have significantly reduced what is available for governance and development across all tiers.
He said: “When large portions of national income are deducted at the source, outside full legislative scrutiny, it creates fertile ground for opacity, unaccounted spending, and financial recklessness. That is how nations lose track of their own wealth.”
Atiku warns Tinubu over declining investments adding that the consequences are already evident in declining investments in critical sectors and worsening economic conditions for citizens. He added: “This is not just a technical fiscal issue; it is a moral one. A government cannot ask citizens to endure painful economic reforms while the gains of those reforms are trapped in a system that lacks transparency and accountability.”
Tinubu’s reforms must align with the World Bank’s recommendations and that all agency funding must be brought under the formal budgetary process, cost-of-collection mechanisms must be reviewed and reduced, and the National Assembly must exercise full oversight over every naira earned by this country.
Anything less will only sustain a system where opacity thrives, and public trust is eroded. He concluded with a stark warning on the direction of the country’s economic management. He said: “We cannot continue on a path where rising revenues coexist with deepening poverty. When the books are full but the people are empty, it raises serious questions about where the money is truly going.
The purpose of governance is not to accumulate figures, but to improve lives, and that purpose is clearly being defeated.”
The structural practice of front-loading Federation Account (FAAC) deductions for agency “costs of collection” has evolved from a fiscal administrative tool into a systemic leak that fundamentally undermines Nigeria’s social contract.
By allowing agencies to bypass the standard legislative budget cycle through automatic, fixed-percentage subtractions, the government has inadvertently created an autonomous spending tier that thrives even as the broader populace faces austerity and record-high public debt of $110.3bn.
This “off-budget” reality not only skews the distribution of wealth, exemplified by single agencies out-earning entire state governments but also erodes fiscal transparency, making recent revenue windfalls from subsidy and forex reforms appear as a benefit to the bureaucracy rather than the citizenry.
True reform would require a political pivot away from these entrenched ad valorem arrangements toward a performance-based, legislative appropriation model that prioritizes national development over institutional overhead.
