October 10, (THEWILL) — The Federal Government has announced sweeping fiscal reforms that end the long-standing practice of allowing revenue-generating agencies to retain a portion of the funds they collect.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, who disclosed this during the presentation of the National Development Update, directed that all revenues must henceforth be remitted in full into the Federation Account for distribution to the federal, state, and local governments.
Edun explained that the decision is part of ongoing fiscal reforms aimed at improving transparency, accountability, and efficiency in public finance under President Bola Tinubu’s administration.
According to him, although Nigeria’s total revenue has been rising, a significant portion has historically been withheld by agencies such as the Federal Inland Revenue Service (FIRS), the Nigeria Customs Service (NCS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) as “costs of collection”.
“Funds have flowed to the Federation Account, but the efficiency of that spending is critical. We have been mandated by His Excellency, the President, to review deductions — not just those for the cost of collection, but deductions generally. Most of those deductions have now been removed once and for all”, he said.
Edun emphasised that the Constitution requires all revenues to be paid into the Federation Account before being shared among the three tiers of government, adding that previous deductions had not translated into visible national development.
He noted that the move would strengthen fiscal discipline and ensure that government spending delivers tangible results.
The Minister also spoke on ongoing social protection programmes aimed at cushioning the effects of recent economic reforms. He said while policy measures had temporarily increased living costs, mechanisms had been put in place to support vulnerable Nigerians.
“The promise was that they would not be left behind. We made sure that each beneficiary is biometrically and uniquely identified. By the end of October, we will have covered about 10 million households — reaching some 50 million Nigerians. Before the end of the year, we plan to complete 50 million households”, he said.
The new policy effectively ends the system through which revenue agencies financed their operations. For instance, the NUPRC had previously retained about four percent of royalties and rents collected on behalf of the Federation, while the FIRS kept N254.82 billion in 2024 and was projected to receive N43.83 billion for the first half of 2025 as collection costs. Similarly, the NCS had been allocated seven percent of its collections before the arrangement was replaced in August 2025 with a four percent Free on Board (FOB) levy on imports, following a directive by the House of Representatives.
Edun said the changes mark “a new era of fiscal discipline and transparency” in Nigeria’s public finance system.
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