Agbakoba: Nigeria Losing Up to N20trn Annually to Revenue Leakages

Wale Igbintade

Nigeria may be losing as much as N20 trillion annually to systemic revenue leakages, according to a policy paper released by Olisa Agbakoba Legal (OAL), which has called for urgent constitutional reforms to enforce full remittance of government revenues into the Federation Account.

The report, unveiled in Lagos, attributed the country’s fiscal challenges to the persistent failure to implement Section 162(1) of the 1999 Constitution, which mandates that all revenues collected by the Federal Government be paid into the Federation Account.

Titled “The Federation Account of Nigeria and Infinite Possibilities: A Framework for Full Remittance and Fiscal Accountability,” the paper described Nigeria’s economic condition as a “revenue paradox,” where rising earnings have not translated into improved fiscal outcomes.

According to the report, federation revenues increased from N16.8 trillion in 2023 to N31.9 trillion in 2024 and are projected to continue rising.

Despite this growth, Nigeria’s total public debt climbed to N159.27 trillion by the end of 2025.

The report noted that debt servicing consumed 78 per cent of federal revenue in 2023 and 69 per cent in 2024, far above the 30 to 40 per cent threshold considered sustainable for developing economies.

It argued that the disconnect between rising revenues and worsening debt is not due to inadequate earnings but to “structural leakage,” with a significant portion of revenue failing to reach the Federation Account.

Citing the World Bank’s 2025 Nigeria Development Update, the paper disclosed that over 39 per cent of gross federation revenues, estimated at more than N14 trillion was deducted before remittance in 2025 alone.

The report identified the Nigerian National Petroleum Company Limited (NNPCL) as a major contributor to the revenue gap, alleging under-remittance and institutional opacity.

It stated that in 2024, the company remitted about N600 billion out of N1.1 trillion due, retaining the balance to offset legacy obligations.

Beyond the figures, the paper highlighted a structural conflict of interest, noting that NNPCL simultaneously acts as producer, seller, cost calculator, and remitter of oil revenues, an arrangement it said undermines accountability.

It recommended separating these roles among independent entities to enhance transparency.

The report also raised concerns over crude-for-loan arrangements, revealing that about 213,000 barrels per day of Nigeria’s oil production have been committed to servicing external debts under various agreements, including the $3.3 billion Project Gazelle facility with Afreximbank, as well as Project Yield, Eagle Export Funding, and Project Leopard.

According to the paper, many of these agreements lack explicit approval from the National Assembly and effectively bypass the Federation Account, with revenues applied directly to offshore debt servicing.

It warned that such practices pre-empt the account before it is even constituted.

While acknowledging Executive Order No. 9 issued in February 2026 by President Bola Tinubu, which halted certain pre-remittance deductions under the Petroleum Industry Act, the report described the measure as a positive but limited intervention, noting that it remains reversible.

The paper also questioned the legal status of the Treasury Single Account (TSA), describing it as an executive initiative without constitutional backing and insisting that it cannot replace the Federation Account framework under Section 162.

To address these issues, OAL proposed a constitutional amendment requiring that all revenues be paid into the Federation Account in gross, without any prior deductions.

It stated that costs related to revenue generation should only be appropriated and disbursed after full remittance, subject to legislative oversight.

According to the report, implementing this “gross remittance” principle could boost distributable revenue by between N15 trillion and N20 trillion annually, significantly reducing reliance on borrowing and improving fiscal transparency.

The firm further urged that the integrity of the Federation Account be made a central issue in the 2027 general elections, noting projections that Nigeria’s debt-to-GDP ratio could reach 33.1 per cent by then.

It called on presidential candidates to present clear strategies for addressing the crisis, framing it as a core issue of accountability and fiscal responsibility.

Agbakoba added that Nigeria’s problem is not a lack of revenue but the absence of a system that ensures full remittance and transparent management of existing resources.

Speaking on the report, Agbakoba blamed widespread ignorance of the Constitution among political office holders for Nigeria’s governance challenges.

He said many politicians lack even a basic understanding of the Constitution, describing this as a fundamental defect undermining effective leadership.

According to him, political actors are often more focused on winning elections than preparing for governance, with public discourse dominated by issues such as compliance with the Electoral Act and election result transmission, rather than substantive policy knowledge.

Agbakoba stressed that his intervention was policy-driven, not partisan, but noted that recent developments had reinforced his concerns about the poor constitutional literacy of many leaders.

He cited instances where senior government officials, including the President, made statements that, in his view, revealed a weak grasp of constitutional provisions, an indication of deeper systemic problems within the political class.

Looking ahead to the 2027 elections, he argued that constitutional competence should be a key criterion for leadership selection.

“It does not matter who becomes President, as long as the person understands the Constitution,” he said.

He warned that asking basic constitutional questions would expose “shocking” levels of ignorance among many aspirants.

Agbakoba challenged Nigerians and the media to scrutinise candidates more rigorously, suggesting that aspirants should be required to explain key constitutional provisions, particularly Section 162 on the Federation Account, as a test of competence.

He argued that the lack of constitutional literacy has contributed to poor resource management and weak accountability, with many officials exercising powers they do not fully understand.

He also criticised the focus on defections and political alignments at the expense of governance issues, urging aspirants to prioritise policy discussions as the country approaches another election cycle.

“The real issue is governance,” he said, warning that without a solid constitutional foundation, policy interventions would continue to fall short.