Pat Stevens/
Nigeria’s fiscal transparency debate intensified on Sunday after the Federal Government pushed back against claims that trillions of naira in federation revenue had been diverted, insisting that recent interpretations of the World Bank report were “misleading” and “incorrect”.
In a detailed statement, Minister of State for Finance, Taiwo Oyedele, said the controversy stemmed from a misunderstanding of how revenues are treated within the Federation Account system, particularly deductions captured by the Federation Account Allocation Committee.
“The attention of the Federal Ministry of Finance has been drawn to recent media reports and commentaries that misrepresent the findings of the latest Nigeria Development Update by the World Bank,” Oyedele said.
He added that claims suggesting a large portion of federation earnings was “diverted” or hidden amounted to a misreading of the report.
“These interpretations misrepresent the World Bank’s analysis and reflect a misunderstanding of the fiscal system,” he stated.
The clarification follows a wave of public reactions triggered by comments from Labour Party presidential candidate in the 2023 elections, Peter Obi, who had cited the World Bank’s findings to argue that Nigeria was “bleeding from within”.
Obi claimed that while federation revenues rose significantly in recent years, a substantial share never reached the Federation Account, raising concerns about accountability and public spending.
The World Bank’s Nigeria Development Update does highlight large pre-distribution deductions from gross federation revenues.
However, the report stops short of describing these flows as outright diversion. Instead, it categorises them under various fiscal obligations, including cost-of-collection, transfers, and statutory allocations.
While emphasising this distinction, Oyedele explained, “FAAC deductions, as presented in the World Bank report, include statutory transfers, savings and investments, security-related expenditures, cost-of-collection charges, refunds to Ministries, Departments and Agencies, as well as transfers and interventions benefiting subnational governments.”
He insisted that such flows are part of established fiscal processes.
“It is important to emphasise that refunds and transfers to states and other tiers of government are not leakages. They represent legitimate fiscal flows, including repayments of obligations and statutorily backed allocations.”
The minister also accused some commentators of selectively using data while ignoring ongoing reforms highlighted in the report.
“Some commentaries selectively relied on past data while ignoring the forward-looking analysis and ongoing public financial management reforms,” he said.
According to him, reforms introduced in early 2026, including a new executive order on petroleum revenue remittances, are already addressing concerns around deductions.
He noted that the World Bank projected that these measures could increase revenues available to all tiers of government by about 0.4 percent of GDP annually.
Beyond the controversy, Oyedele said the broader message of the report was positive.
“Economic growth is becoming more broad-based across sectors. Inflation, while still elevated, is declining due to deliberate policy actions. Nigeria’s external position has strengthened significantly, with improved reserves and a current account surplus,” he said.
He added that debt indicators had also improved, with a decline in the debt-to-GDP ratio for the first time in over a decade.
“The World Bank does not conclude that Nigeria’s fiscal system is collapsing or that reforms have failed. Rather, it states that reforms are working and must be sustained,” Oyedele stated.
Despite the government’s clarification, reactions on X showed deep scepticism among some users.
One user wrote that the documents “have broken out”, suggesting the government’s response was defensive, while another dismissed the explanation of “legitimate statutory transfers”, alleging that such funds often end up in private hands.
A separate post echoed support for Obi’s position, arguing that public hardship contradicted claims of improving macroeconomic fundamentals.
While the World Bank report acknowledges improvements in macroeconomic indicators, it also highlights structural inefficiencies in revenue management that continue to limit the funds ultimately available for distribution.
Oyedele urged stakeholders to engage more carefully with fiscal data.
“An accurate understanding and responsible reporting of fiscal information are critical to maintaining confidence in Nigeria’s reform trajectory and economic outlook,” he said.
He added that the government remained committed to improving revenue mobilisation, strengthening transparency, and ensuring efficient public spending.
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