Fiscal Storm: ActionAid Slams ₦34trn Revenue Deductions, Calls for Transparency

By: Michael Mike

ActionAid Nigeria has called for an urgent forensic audit of Nigeria’s revenue management system following revelations that more than ₦34 trillion was deducted from federal earnings before allocation to the three tiers of government.

The organisation said the scale of the deductions—accounting for over 40 per cent of federal revenue in recent years—points to systemic weaknesses in public financial management and poses a serious threat to fiscal stability and development financing.

In a statement issued on Thursday, ActionAid said findings by the World Bank confirmed that a significant portion of government income is being absorbed through pre-distribution charges, including cost-of-collection frameworks and agency remittances, with limited transparency on their composition and utilisation.

“These findings reinforce long-standing concerns about Nigeria’s widening fiscal constraints and rising debt burden,” the group said. “The persistence of large-scale revenue leakages represents both a governance failure and a missed opportunity to strengthen fiscal stability.”

According to the organisation, the deductions—estimated at more than ₦34 trillion—have continued to rise alongside government revenues, leaving federal, state, and local governments with significantly reduced resources to fund public services.

ActionAid warned that the trend is worsening Nigeria’s reliance on borrowing, citing projections by the International Monetary Fund that the country’s debt-to-GDP ratio could climb to 33.1 per cent by 2027.

“The widening gap between gross revenue and distributable income is constraining development financing and increasing dependence on debt,” the statement added.

The group expressed particular concern over what it described as “opaque and fragmented” revenue channels, noting that substantial portions of national income pass through multiple layers before reaching the Federation Account.

It said the lack of public disclosure around these deductions—including their justification, structure, and end-use—raises critical accountability questions.

“There is limited transparency on how these funds are managed,” the organisation stated. “This opacity weakens fiscal oversight and undermines public trust in governance.”

ActionAid also pointed to broader implications for national development, warning that reduced public revenue is limiting government capacity to invest in essential sectors such as healthcare, education, security, and social protection.

The Country Director of ActionAid Nigeria, Andrew Mamedu, said the consequences are already being felt by millions of Nigerians.

“For citizens grappling with rising inflation, declining purchasing power, and economic hardship, the continued reduction in available public resources means fewer investments in essential services,” he said.

He added that weakening fiscal capacity is also exacerbating insecurity, as economic pressures fuel crime, displacement, and social instability.

“At a time when livelihoods are becoming more fragile, the erosion of public revenue further limits the government’s ability to respond effectively to these challenges,” Mamedu said.

The organisation further criticised the lack of transparency surrounding major public expenditures, citing concerns over projects such as the Nigeria Revenue Service building, where cost details and procurement processes have not been publicly disclosed.

“Citizens have a right to know how public funds are utilised,” the group said, stressing that accountability must extend beyond revenue collection to expenditure.

ActionAid warned that without urgent reforms, Nigeria risks entrenching a system where public resources are consistently depleted before they can deliver meaningful impact.

“The continued expansion of unchecked deductions poses a direct threat to equitable development, fiscal stability, and public trust,” it said.

To address the issue, the organisation called on the Federal Government to undertake a comprehensive and transparent review of all revenue deduction frameworks, with a view to ensuring accountability and efficiency.

It also demanded the immediate publication of detailed breakdowns of all deductions, strengthened independent oversight of revenue-generating agencies, and reforms to eliminate systemic leakages.

In addition, ActionAid urged the National Assembly to intensify its oversight role through public hearings and scrutiny of deduction structures, while calling on state governments, civil society, and the media to increase pressure for transparency.

“An independent forensic audit of all deduction mechanisms is critical to restoring public confidence,” the organisation said.

ActionAid added that Nigeria’s development trajectory depends not only on revenue generation but on how effectively public resources are managed and deployed.

“This is not just a fiscal issue; it is a matter of justice,” Mamedu said. “Every naira that fails to reach essential services denies Nigerians access to healthcare, education, and dignity.”

Fiscal Storm: ActionAid Slams ₦34trn Revenue Deductions, Calls for Transparency