Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, made this announcement on Wednesday in Abuja during a panel discussion following the launch of the October 2025 edition of the World Bank’s Nigeria Development Update, titled “From Policy to People: Bringing the Reform Gains Home.” 

Edun clarified that, following a directive from the President, various layers of deductions that were previously applied before disbursing proceeds from the Federation Account Allocation Committee have been removed. 

He indicated that this initiative aims to improve fiscal transparency and ensure that a greater portion of national revenues is allocated to the three tiers of government. 

“Funds have been directed into the Federation Account, but the important point is this: efficiency in that spending is paramount. We have been instructed by His Excellency, President Bola Tinubu, to assess deductions—not just those for cost of collection but also deductions in general. When examining the gross figures, one can see various deductions before arriving at the net distributable amount for the federal, state, and local governments. I must inform you that even during the last allocation by the FAC, most of those deductions were eliminated once and for all,” he stated. 

The minister added that the reform is part of the government's broader initiative to strengthen fiscal governance, enhance transparency, and provide both federal and state governments with more consistent revenues to aid in development projects. 

He also mentioned that the government is reviewing all deductions from gross revenues, including refunds and intervention funds, to ensure that every naira collected is optimally utilized for national development. 

“The constitution stipulates that funds should flow from revenue-collecting agencies into the federation account and be distributed according to the established formula, and that is what is now being implemented. We can expect ongoing progress regarding the review of different deductions, but we can anticipate greater transparency, efficiency, and funding for development at the federal level, in the states, and of course, flowing from the states to local governments. Consequently, we expect a much healthier fiscal situation. We will focus on significantly improved accountability, transparency, and effectiveness of spending. We are in the process of refining this system because efficiency and transparency are essential for achieving fiscal sustainability,” Edun elaborated. 

Under Nigeria’s fiscal framework, agencies like the Federal Inland Revenue Service and the Nigeria Customs Service have routinely kept a portion of the revenues they gather as a “cost of collection.” Critics have long argued that this practice encourages inefficiency, raises administrative costs, and diminishes the funds available for distribution to the federal, state, and local governments through FAAC. 

Earlier, World Bank Lead Economist for Nigeria, Samer Matta, remarked that while Nigeria’s gross revenue collections significantly increased in 2025, a considerable share was being lost to various deductions that did not directly promote national development. 

In his economic overview, Matta pointed out that revenues distributed by FAAC rose from approximately 5 percent of GDP in 2023 to nearly 9.5 percent in the initial eight months of 2025, largely driven by improved oil revenues and non-oil tax collections.