Nigeria’s revenue-sharing framework, which allocates 4 per cent of non-oil and oil revenues (excluding royalties) to the Federal Inland Income Service (FIRS), far exceeds these of peer international locations equivalent to Kenya, Ghana, South Africa, and Uganda.
That is based on the World Bank’s newly launched October 2025 version of the Nigeria Growth Replace (NDU), themed “From Coverage to Individuals: Bringing the Reform Positive factors Dwelling”.
In keeping with the Bank, this association has contributed to the surge in statutory deductions, which in flip has lowered the quantity of income obtainable for distribution to the federal, state, and native governments via the Federation Account Allocation Committee (FAAC).
“Nigeria’s present association—allocating a set 4 p.c of non-oil and oil revenues (excluding royalties) to the Federal Inland Income Service (FIRS)—is considerably larger than the price of assortment in peer international locations,” the report said.
The Bank famous that Kenya caps its value of assortment between 1–2 p.c of budgeted revenues and offers a efficiency bonus solely when targets are exceeded. In distinction, Uganda, South Africa, and Ghana primarily fund their tax and income companies via annual parliamentary appropriations, guaranteeing extra clear budgetary oversight.
The World Bank warned that Nigeria’s elevated value of assortment mannequin has created fiscal inefficiencies which can be straining public funds and undermining equitable useful resource sharing amongst tiers of presidency.
In keeping with the report, whole statutory deductions surged to N1.785 trillion in 2024, almost double the N870 billion recorded in 2023.
The Bank recognized key beneficiaries of those deductions because the Federal Inland Income Service (FIRS), Nigeria Customs Service (NCS), Nigerian Upstream Petroleum Regulatory Fee (NUPRC), Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), and the North-East Growth Fee (NEDC).
FIRS, NUPRC, others obtained extra allocations than a number of ministries
The World Bank famous that the dimensions of those deductions is “substantial,” stressing that in 2024, a few of these parastatals obtained extra allocations from FAAC than a number of states earned in whole revenues.
“In 2024, a number of of those parastatals obtained extra from FAAC than particular person states collected in whole revenues. Furthermore, the mixed allocations to those companies exceeded the 2024 budgetary sources for pro-poor federal ministries equivalent to Training (N1,589 billion), Well being (N1,336 billion), and Poverty Alleviation (N263 billion),” the Bank said.
What you must know
The NDU is without doubt one of the World Bank’s flagship reviews on Nigeria, offering common assessments of the nation’s financial panorama, coverage progress, and potential dangers to inclusive and sustainable progress.
In its October 2025 version, the report famous that Nigeria’s financial system is exhibiting indicators of resilience and restoration, with the World Bank projecting that the nation’s public debt will fall under 40% of GDP for the primary time in over a decade.
In keeping with the NDU, Nigeria’s financial system expanded by 3.9% year-on-year within the first half of 2025, up from 3.5% throughout the identical interval in 2024. The expansion, the report defined, was pushed by robust efficiency within the providers and non-oil industries, supported by enhancements in oil manufacturing and agriculture.
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