Amanze Chinonye
The Federal Government has abolished the long-standing practice of revenue-generating agencies deducting a portion of collections as operational costs before remitting funds to the Federation Account Allocation Committee (FAAC).
Finance and Coordinating Minister of the Economy, Wale Edun, announced the policy on Thursday, October 9, in Abuja during the public presentation of the National Development Update.
He said the reform, which affects major agencies such as the Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), was part of a broader effort to enforce fiscal discipline and transparency in line with President Bola Tinubu’s Renewed Hope Agenda.
Join our WhatsApp Channel“The Constitution says funds should flow from revenue-collecting agencies into the Federation Account and be distributed according to the set formula, and that is what is now being done,” Edun said.
He revealed that while Nigeria’s total revenue had increased in recent years, a significant portion was being withheld as cost-of-collection by these agencies a system that limited funds available for national and subnational development.
According to official figures, the FIRS retained ₦254.82 billion in 2024 and was projected to receive ₦43.83 billion for the first half of 2025 as collection costs. Similarly, the NUPRC kept about 4 percent of royalties, rents, and other oil income, while the NCS previously retained 7 percent before its funding structure was revised in August to a 4 percent Free on Board (FOB) levy on imports, as directed by the House of Representatives.
Edun disclosed that deductions previously made at the FAAC level had now been “removed once and for all,” ensuring that all gross revenues go directly into the Federation Account before sharing among the three tiers of government.
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He explained that the decision was in line with President Tinubu’s directive to review all forms of deductions to guarantee that more resources reach the Federation Account and are efficiently utilized.
Supporting Vulnerable Nigerians
The minister also linked the reform to broader economic stabilization and social protection goals under the Renewed Hope Agenda.
He said that while ongoing reforms had temporarily increased the cost of living, government interventions were in place to shield vulnerable households.
“By the end of October, we will have covered about 10 million households, reaching 50 million Nigerians under the first phase of the direct benefit transfers,” Edun stated, adding that every beneficiary was biometrically identified to ensure accountability.
Fiscal analysts have described the move as a landmark step toward transparency, but they caution that clarity in implementation will be vital to avoid bureaucratic resistance and funding shortfalls for key agencies.
The reform effectively centralizes Nigeria’s public revenue management a shift reminiscent of the Treasury Single Account (TSA) introduced under previous administrations and signals renewed political will to curb discretionary deductions and strengthen federal oversight.
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