Nigeria may be losing as much as N20 trillion annually to systemic revenue leakages, according to a new policy paper released by Olisa Agbakoba Legal (OAL), which has called for sweeping constitutional reforms to strengthen fiscal accountability and enforce full remittance of government revenues into the Federation Account.
The report, unveiled in Lagos and titled “The Federation Account of Nigeria and Infinite Possibilities: A Framework for Full Remittance and Fiscal Accountability,” blamed the country’s worsening fiscal crisis on the failure to fully implement Section 162(1) of the 1999 Constitution, which mandates that all federally collected revenues be paid into the Federation Account.
Describing Nigeria’s current economic reality as a “revenue paradox,” the paper noted that despite significant increases in government earnings, fiscal outcomes have continued to deteriorate.
According to the report, federation revenues rose from N16.8 trillion in 2023 to N31.9 trillion in 2024, with projections indicating further growth. However, Nigeria’s total public debt climbed to N159.27 trillion by the end of 2025.
The report further stated that debt servicing consumed 78 per cent of federal revenue in 2023 and 69 per cent in 2024, far exceeding the 30–40 per cent sustainability benchmark for developing economies.
OAL argued that the crisis is not driven by insufficient revenue generation but by “structural leakages” that prevent substantial portions of government earnings from reaching the Federation Account.
Citing the World Bank’s 2025 Nigeria Development Update, the paper disclosed that more than 39 per cent of gross federation revenues — estimated at over N14 trillion — was deducted before remittance in 2025 alone.
The Nigerian National Petroleum Company Limited (NNPCL) was identified as a major contributor to the revenue gap. The report alleged that the company remitted only about N600 billion out of N1.1 trillion due in 2024, while retaining the balance to settle legacy obligations.
Beyond under-remittance concerns, the report criticised what it described as a structural conflict of interest within the NNPCL, noting that the company simultaneously functions as producer, seller, cost calculator, and remitter of oil revenues.
According to OAL, this arrangement weakens transparency and accountability. It recommended separating those responsibilities among independent institutions.
The report also raised alarm over crude-for-loan arrangements, revealing that approximately 213,000 barrels of oil per day have been committed to servicing external debts under facilities such as the $3.3 billion Project Gazelle agreement with Afreximbank, alongside Project Yield, Eagle Export Funding, and Project Leopard.
It argued that many of these agreements bypass the Federation Account entirely, with oil revenues channelled directly toward offshore debt repayment without clear approval from the National Assembly.
While acknowledging President Bola Tinubu’s Executive Order No. 9 issued in February 2026, which halted certain pre-remittance deductions under the Petroleum Industry Act, the report described the measure as temporary and insufficient because it lacks constitutional backing.
The paper also questioned the legal standing of the Treasury Single Account (TSA), describing it as an executive policy initiative that cannot substitute the constitutional framework governing the Federation Account.
To address the crisis, OAL proposed a constitutional amendment that would require all government revenues to be remitted into the Federation Account in full before any deductions are made.
Under the proposal, all operational costs tied to revenue generation would only be appropriated after remittance and subjected to legislative oversight.
The report estimated that implementing a “gross remittance” framework could increase distributable revenue by between N15 trillion and N20 trillion annually, reduce dependence on borrowing, and improve fiscal transparency.
OAL also urged Nigerians to make the integrity of the Federation Account a major issue in the 2027 general elections, warning that the country’s debt-to-GDP ratio could rise to 33.1 per cent by then.
Speaking on the report, senior advocate and former NBA president Olisa Agbakoba said Nigeria’s core problem is not a lack of revenue but the absence of systems that guarantee transparent remittance and management of public funds.
Agbakoba also blamed Nigeria’s governance challenges on poor constitutional literacy among political office holders, arguing that many leaders lack even a basic understanding of the Constitution.
According to him, political actors are often more concerned about winning elections than preparing for governance, while public discourse remains dominated by electoral controversies instead of policy competence.
He maintained that constitutional knowledge should become a key standard for leadership selection ahead of the 2027 elections.
“It does not matter who becomes president, as long as the person understands the Constitution,” Agbakoba said.
He challenged Nigerians and the media to scrutinise political aspirants more rigorously by demanding clear explanations of critical constitutional provisions, especially Section 162 dealing with the Federation Account.
Agbakoba warned that without strong constitutional understanding and accountability, governance reforms and policy interventions would continue to produce limited results.
“The real issue is governance,” he stated.
