Nigeria recorded a major fiscal milestone in 2025 as inflows into the Federation Account rose to over ₦35 trillion, representing a significant improvement in our national revenue performance and public finance management.
The Accountant-General of the Federation (AGF), Shamseldeen Ogunjimi, disclosed this during the Federation Account Allocation Committee (FAAC), Post-Mortem Sub-Committee Retreat held in Enugu, where key stakeholders reviewed revenue trends and fiscal policies affecting the federation account.
Ogunjimi, who was represented at the event by Rita Okolie, Director of Federation Account, said the 2025 inflow marked an increase of ₦8 trillion or 29.63 per cent compared with the ₦27 trillion recorded in 2024.
The retreat was themed “Assessing Fiscal and Sectoral Policies for Closing Revenue Leakage in the Federation Account.”
Testament to Fiscal Reforms
According to the AGF, the growth in federation account inflows is a direct reflection of the fiscal reforms introduced by the administration of President Bola Tinubu, particularly those aimed at improving revenue mobilisation, strengthening compliance, and reducing leakages.
He noted that the improved performance also signals a gradual shift toward a more resilient and diversified economy, one that is less dependent on the volatility of oil revenues, which have historically exposed Nigeria’s finances to global price shocks.
Federation Account as Nigeria’s Fiscal Lifeline
The AGF described the federation account as the fiscal lifeline of Nigeria’s federal system, emphasising its central role as the primary channel through which national revenues are mobilised, pooled, and equitably distributed among the federal, state, and local governments.
He explained that revenues flowing into the account are drawn from multiple sources, including oil receipts, company income tax, value-added tax (VAT), electronic money transfer levies, and other statutory revenues, which are shared monthly through FAAC.
However, Ogunjimi warned that despite the gains recorded in 2025, the system still faces persistent structural challenges.
“Persistent revenue shortfalls, volatile oil receipts, suboptimal non-oil revenue performance, and systemic leakages have continued to undermine the efficiency, predictability, and credibility of the federation account,” he said.
Revenue Leakages: A Concrete Problem
The AGF stressed that revenue leakages are not abstract or theoretical concerns, but specific and quantifiable losses that occur at identifiable stages of the public finance process.
According to him, these leakages occur at three critical junctions:
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Revenue collection
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Remittance to the federation account
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Expenditure oversight
“Revenue leakages are lost opportunities for development, weakened public trust, and constraints on our collective aspiration for a stronger and more prosperous Nigeria,” Ogunjimi said.
“Every naira lost is a school not built, a road unfinished, or a vital service delayed.”
He added that the timing of the retreat was particularly significant, given the growing importance of fiscal resilience, revenue integrity, and institutional accountability in Nigeria’s current economic environment.
Government’s Commitment to Equity and Transparency
Also speaking at the retreat, the Minister of State for Finance, Doris Anite, reassured participants of the federal government’s commitment to equity, fairness, and justice in the management of the federation account.
The minister, who was represented by Ali Mohammed, Director of Home Finance, expressed confidence that deliberations at the retreat would strengthen existing mechanisms and ensure that the federation account better serves the interests of Nigerians.
She emphasised that transparent and accountable management of shared revenues remains critical to sustaining trust among the three tiers of government.
Broader Influences on Revenue Distribution
Earlier, Mohammed Shehu, Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), noted that the volume of resources available for distribution among the three tiers of government is increasingly being shaped by broader economic and policy factors.
Shehu, represented by Eyo-Nsa Whiley, Vice-Chairman of the FAAC Post-Mortem Sub-Committee, said these influences include economic performance, evolving fiscal and sectoral policies, legislative reforms, economic instruments, and financing arrangements.
He stressed the need for continuous review of these factors to ensure that revenue allocation remains responsive to Nigeria’s developmental needs.
Conclusion
The rise in federation account inflows to ₦35 trillion in 2025 marks a notable improvement in Nigeria’s fiscal outlook and highlights the impact of recent economic reforms.
While the gains signal progress toward stronger revenue mobilisation and reduced dependence on oil, stakeholders agree that closing revenue leakages, strengthening institutions, and improving non-oil revenue performance remain critical to sustaining this momentum.
As Nigeria looks ahead, the federation account will continue to play a pivotal role in funding governance, development, and service delivery across all levels of government.
