Federal Ministry of Finance Denies Allegations of Revenue Diversion
The Federal Ministry of Finance has firmly rejected claims that a large portion of Nigeria’s federation revenue is being diverted or concealed. The ministry described such reports as a misinterpretation of the latest Nigeria Development Update (NDU) released by the World Bank. This statement comes in response to recent media commentary suggesting that there are hidden expenditures and leaks in the country’s fiscal system.
The World Bank recently highlighted that fuel prices in Nigeria have surged by more than 50% since the outbreak of the Iran conflict. This increase has intensified inflationary pressures and raised concerns about household welfare. Fiseha Haile, the World Bank’s Lead Economist for Nigeria, noted during the NDU presentation in Abuja that the sharp rise in fuel prices has significantly increased transportation, food, and production costs across the economy.
In addition, the International Monetary Fund (IMF) has advised Nigeria to prioritize debt sustainability over the choice between external and domestic borrowing. This recommendation comes as the country faces mounting fiscal pressures and global economic uncertainty.
Clarifying Misconceptions About Fiscal Deductions
Taiwo Oyedele, the Minister of State for Finance, addressed media reports that suggested “hidden spending” and the diversion of funds. He clarified that these reports do not reflect the actual findings of the World Bank. Oyedele emphasized that deductions made by the Federation Account Allocation Committee (FAAC) have been wrongly portrayed as waste or missing funds. He stressed that these deductions are legitimate and part of established fiscal processes.
According to the minister, the FAAC deductions include:
- Statutory transfers
- Savings and investments
- Security-related expenditures
- Cost-of-collection charges
- Refunds to Ministries, Departments and Agencies (MDAs)
- Transfers and interventions benefiting subnational governments
Oyedele further explained 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.
Addressing Selective Use of Data
The ministry also criticized what it described as the selective use of outdated data in some commentaries. It noted that recent reforms highlighted in the World Bank report were ignored. The ministry pointed out that the World Bank explicitly mentions that reforms implemented in early 2026, including the recently signed Executive Order to safeguard the remittance of petroleum revenues, are already addressing concerns around deductions. These reforms are expected to improve transparency and increase revenues available to all tiers of government by about 0.4% of GDP annually.
The ministry warned that misinterpreting one aspect of the analysis without acknowledging the progressive reforms and measures already introduced to enhance distributable federation revenues gives a distorted picture. It emphasized that the broader message of the World Bank report presents a positive outlook for Nigeria’s economy, citing more broad-based economic growth, declining inflation, improved external reserves, and a current account surplus.
Positive Economic Indicators
The report also noted an improvement in debt indicators, including a reduction in the debt-to-GDP ratio, which the Ministry claimed was the first recorded in over a decade. The ministry stressed that the World Bank did not conclude that Nigeria’s fiscal system is failing but rather indicated that ongoing reforms are yielding results and should be sustained.
The Federal Government remains committed to strengthening fiscal transparency, improving revenue mobilization, ensuring efficient public spending, and deepening reforms to support inclusive economic growth. An accurate understanding and responsible reporting of fiscal information are critical to maintaining confidence in Nigeria’s reform trajectory and economic outlook.
Call for Responsible Reporting
The ministry urged media organizations and stakeholders to ensure accurate reporting of fiscal issues, warning that misrepresentation could undermine public confidence and ongoing reform efforts.
