The Nigerian Government has stopped revenue-generating agencies from deducting portions of the funds they collect as the cost of collection, ending a long-standing practice.
Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, announced this on Thursday in Abuja during the presentation of the National Development Update, saying the move aims to enhance fiscal transparency and ensure more funds flow into the Federation Account for distribution to the federal, state, and local governments.
Edun explained that while national revenue has been rising, substantial amounts were being withheld by agencies such as the Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) as collection costs—without a corresponding impact on national development.
“We have been mandated by Mr. President to review deductions, not just for the cost of collection but all deductions generally,” Edun said.
“Even during the last FAAC allocation, most of those deductions were removed once and for all. The Constitution requires that all revenues flow into the Federation Account and be distributed according to the approved formula—and that is what is now being done.”
The minister added that the reform is part of President Bola Tinubu’s broader fiscal overhaul to strengthen efficiency and accountability in public finance management.
Edun also highlighted ongoing social protection programmes under the Renewed Hope Agenda, noting that while reforms have led to temporary hardship, targeted interventions are being implemented to cushion the effects.
“We are ensuring that every beneficiary is biometrically and uniquely identified,” he said.
“By the end of October, we will have reached 10 million households—about 50 million Nigerians—and the goal is to reach 50 million households before year-end.”
Until now, agencies such as the NUPRC retained about 4% of royalties and rents collected for the Federation Account, while the FIRS kept ₦254.82 billion in 2024 and was expected to retain ₦43.83 billion for the first half of 2025.
Similarly, the NCS previously received 7% of revenue as a collection cost, but this was replaced in August 2025 with a 4% Free on Board (FOB) levy on imports, now serving as its primary funding source.
