States receive 85% of Nigeria’s resources, FG gets only 15% - Minister of Finance

Taiwo Oyedele, Minister of Finance and Coordinating Minister of the Economy, says the subnationals received about 85 percent of Nigeria’s resources, leaving the federal government with 15 percent despite its extensive responsibilities.

Oyedele spoke on Wednesday at Chatham House in London during a discussion on Nigeria’s economic outlook, progress on reforms and prospects for inclusive growth.

He said the federal government is the most deprived tier in terms of resources compared with the responsibilities it has to fulfil, including defence, internal security, foreign affairs, and the conduct of elections.

The minister said the federal government also gets involved in basic education and primary healthcare, adding that it needs more resources to effectively perform its responsibilities.

“Based on data, the center is the most deprived of resources yet it has the most responsibilities. Of all Nigerian resources, roughly 85 percent are assigned to subnational. Only 15 percent to the federal government,” Oyedele said.

“In Nigeria, the federal government collects no income tax from individuals.”

He cited the distribution of value-added tax (VAT), saying 90 percent goes to state government while the federal government receives 10 percent.

The minister said states also retain revenue from stamp duties, while the federal government relies only on its share of the federation account.

“When they talk about the formula of 52 point something percent of federal government, what they are not telling you is that 52 point whatever percentage is a percentage of a smaller portion of the federation account,” he added.

Nigeria’s current revenue allocation formula generally assigns 52.68 percent of revenue to the federal government, 26.72 percent to state governments, and 20.60 percent to local governments.

The senate on February 3 initiated the process to amend relevant provisions of the 1999 Constitution to increase revenue allocation to the federal government through an upward review of the existing formula.

Despite receiving the largest share, the senate said the federal government requires additional revenue to meet its expanding responsibilities.

FG PLANS TO TRANSFER SOME RESPONSIBILITIES TO STATES

Oyedele said the federal government plans to transfer some responsibilities to states, noting that they are better positioned to perform them, while improving the centre’s ability to generate revenue without imposing an additional burden on Nigerians.

“That way you have extra resources to influence decisions at the subnational level. It’s called federal transfers,” the minister said.

Under the proposed arrangement, he said, the federal government could provide funding to states to improve basic education, support agriculture, and build access roads linking farms to markets.

Oyedele said such transfers could encourage states to prioritise projects with direct economic and social benefits rather than spend heavily on other infrastructure.