How Nigeria’s Wealth Disappears Before Reaching the Federation Account

Nigeria’s economic crisis may not be rooted in a lack of money, but in a system that allows enormous revenues to disappear before they ever reach the nation’s central purse.

A new policy paper by Olisa Agbakoba Legal argues that trillions of naira meant for the Federation Account, the constitutional pool shared by federal, state and local governments, are routinely lost through deductions, under-remittances and opaque revenue practices, forcing a resource-rich nation to keep borrowing while millions sink deeper into poverty.

The paper, ‘The Federation Account of Nigeria and Infinite Possibilities’, argues that the country’s chronic poverty, collapsing infrastructure and escalating debt burden are not simply the consequences of low revenues or economic misfortune. They are symptoms of a deeper structural problem: Nigeria’s money is not arriving where the Constitution says it should.

That claim is difficult to ignore when set against the numbers.

Between 2023 and 2024, federation revenues rose from N16.8 trillion to N31.9 trillion, with 2025 figures showing continued growth. Yet in the same period, public debt ballooned to N159.27 trillion, while debt servicing swallowed 78 percent of federal revenues in 2023 and 69 percent in 2024, well above the 30–40 percent threshold considered sustainable by international financial institutions.

For ordinary Nigerians, these figures translate into visible decline: roads that decay faster than they are repaired, hospitals stripped of essential drugs, schools with no teachers, and electricity that disappears more often than it stays.

How does a country generating record revenues still borrow to survive?

The answer, the paper says, lies in what it calls “structural leakage.” Every day, billions of naira generated by agencies of government are deducted, retained, redirected or delayed before reaching the Federation Account. In 2025 alone, over N14.94 trillion, nearly 40 percent of gross federation revenues, was reportedly consumed by deductions before any distribution could occur.

This is not a technical irregularity buried in accounting ledgers. It is money that never became classrooms, never paved highways, never electrified villages.

And nowhere is the opacity more glaring than in Nigeria’s oil sector. The Nigerian National Petroleum Company Limited (NNPCL), the country’s single largest revenue generator, remitted only N600 billion of N1.1 trillion due in 2024, withholding N500 billion reportedly to offset legacy arrears. There is also an ongoing Federation Account Allocation Committee (FAAC) investigation into allegations of $42.37 billion in under-remittances between 2011 and 2017.

For years, critics have complained about NNPCL’s dual role as producer, seller, cost calculator and remitter of crude oil revenues. It is a structural conflict of interest that places accountability at the mercy of internal accounting.

The paper argues that no single institution should simultaneously earn revenue, determine deductible costs, calculate net proceeds and execute remittance.