Governments Face Funding Strain Despite N118.8tn Revenue Windfall

Nigeria’s three tiers of government have generated an estimated N118.8 trillion in revenue over the past three years, yet many continue to struggle with meeting critical financial obligations, raising fresh concerns over transparency, accountability and the effectiveness of public spending.

According to recent findings by the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC), the Federal Government, the 36 states and the 774 local government councils received about N53.3 trillion from the Federation Account Allocation Committee (FAAC) between 2023 and May 2026. In addition, internally generated revenue (IGR) across the three levels of government is estimated at N65.5 trillion, bringing total public revenue during the period to approximately N118.8 trillion.

Economic analysts project that the combined revenue could rise to nearly N150 trillion by the end of 2026 if current trends continue. The estimate excludes loans and borrowings, meaning the actual amount available to governments may be significantly higher.

Revenue rises sharply after economic reforms

The dramatic increase in government revenue followed major economic reforms introduced by the current administration, particularly the removal of fuel subsidy and the liberalisation of the foreign exchange market.

FAAC allocations have steadily increased over the years. In 2022, before the reforms, the three tiers of government shared an average of N758 billion monthly. That figure rose to N845 billion in 2023 before climbing to about N1.3 trillion monthly in 2024, the administration’s first full fiscal year.

By 2025, monthly FAAC distributions had increased further to approximately N1.93 trillion, while average allocations for the first five months of 2026 stood at about N2.08 trillion.

These figures do not include the Federal Government’s independent revenues or the internally generated revenues of states and local governments.

Financial obligations remain unmet

Despite the significant increase in revenue, governments across the country are reportedly struggling to fulfil key financial commitments.

Reports indicate that contractors with completed and verified projects remain unpaid, pension arrears persist at the federal level, while several states have yet to fully implement the national minimum wage despite improved earnings.

The situation has sparked renewed concerns over whether increased public revenue is translating into improved governance, infrastructure development and better living conditions for Nigerians.

The Federal Government, in particular, continues to grapple with heavy debt servicing obligations alongside outstanding payments to contractors and pensioners.

Several groups of contractors have repeatedly staged protests at the Federal Ministry of Finance in Abuja over unpaid contracts. Although government officials disclosed that about N700 billion had been processed for payments in recent months, contractors insisted that only a fraction had reached them.

The All Indigenous Contractors Association of Nigeria (AICAN) recently claimed that only N40 billion had been paid to its members, compared to about N280 billion expected.

Capital project implementation remains weak

Available government records also reveal poor implementation of capital budgets despite rising revenues.

Budget Office reports showed that in 2023, only about N857 billion, representing roughly 25 per cent of the expected capital expenditure by July, had been released to Ministries, Departments and Agencies (MDAs).

In the 2024 fiscal year, although N13.77 trillion was allocated for capital projects out of a total budget of N35.06 trillion, actual capital expenditure amounted to only about N6.17 trillion.

Similarly, records from the Office of the Accountant-General of the Federation showed that capital releases to MDAs during the first half of 2024 remained relatively low before improving later in the year.

Government officials also admitted that only about 30 per cent of the 2025 capital budget was implemented, forcing about 70 per cent of planned projects to be rolled over into the 2026 fiscal year.

Analysts say the recurring poor implementation of capital budgets highlights persistent fiscal management challenges despite increasing revenues.

Experts call for greater accountability

Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, acknowledged that the administration’s reforms had substantially improved government revenue but stressed that attention should now shift from revenue generation to accountability.

He argued that while federal finances receive considerable scrutiny from civil society, the media and the National Assembly, many state and local governments remain opaque in their financial reporting.

According to him, detailed information on budgets, procurement processes, revenue collections and project execution should be made readily accessible to citizens to strengthen public oversight.

Yusuf also urged Nigerians to become more actively involved in governance beyond election periods by engaging elected officials on budget implementation and public service delivery.

Civil society groups demand better outcomes

Country Director of Global Rights Nigeria, Abiodun Baiyewu, questioned the impact of the increased revenues on the lives of ordinary Nigerians.

She observed that despite the unprecedented earnings, there has been little visible improvement in infrastructure, public services or overall living standards.

Baiyewu called for greater transparency in government finances and urged citizens to organise themselves to demand accountability and participate more actively in decisions affecting public expenditure.

Similarly, Country Director of ActionAid Nigeria, Dr. Andrew Mamedu, argued that the effectiveness of public spending depends not on the amount of money available but on how efficiently and transparently it is utilised.

He noted that a significant portion of government allocations continues to be consumed by recurrent expenditure, including salaries, political office costs, debt servicing and administrative expenses, leaving limited resources for productive investments.

Mamedu also pointed to inflation, exchange rate volatility, weak procurement systems and governance failures as factors reducing the impact of increased government spending.

Call for outcome-driven budgeting

Civil society organisations urged governments at all levels to adopt a more disciplined, transparent and outcome-driven approach to public finance management.

They recommended greater investment in infrastructure, agriculture, healthcare, education and other sectors capable of driving economic growth and improving citizens’ welfare.

The groups further called for stronger public access to fiscal information, improved budget monitoring, enhanced whistleblower protection and increased citizen participation in tracking government projects and expenditures.

According to the analysts, while Nigeria’s revenue profile has improved significantly in recent years, the true measure of success will depend on whether the additional resources translate into tangible improvements in infrastructure, public services and the quality of life of ordinary Nigerians.

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