Federation Account inflows hit N56.4trn on reforms

The federal government has reported a sharp rise in inflows into the Federation Account over the past three years, with total accruals amounting to N56.42 trillion between 2023 and the first 10 months of 2025.

Chairman of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) Dr Mohammed Shehu, who made this disclosure, said the development reflects the impact of fiscal reforms, improved coordination among revenue agencies, and stronger compliance mechanisms.

Data presented by the Revenue Mobilisation Allocation and Fiscal Commission Chairman showed that gross accruals into the Federation Account stood at N11.93 trillion in 2023 and rose significantly to N21.43 trillion in 2024. Between January and October 2025 alone, inflows reached N23.06 trillion, surpassing the full-year performance of previous years and pointing to sustained growth in government revenues.

Speaking at a two-day National Stakeholders’ Discourse on Enhancing Fiscal Efficiency and Revenue Growth under the Nigeria Tax Act, 2025, held in Abuja, the Chairman of RMAFC, Dr Mohammed Shehu, said the upward trend in revenue was the outcome of deliberate reforms aimed at strengthening fiscal discipline and expanding the revenue pool available to federal, state, and local governments.

“The continued growth in inflows is due to fiscal reforms, tracking and coordination among revenue agencies, stronger audits, digital tracking, and improved fiscal discipline,” Shehu said.

According to him, these measures have helped to widen the revenue base and improve transparency in collections and remittances.

He noted that the improvement marked a shift in Nigeria’s public finance structure, saying, “This shift marks progress towards a more resilient, diversified and sustainable public finance system with less dependence on oil earnings.”

Shehu said Nigeria’s long-standing dependence on crude oil had exposed the economy to boom-and-bust cycles driven by volatile global prices, resulting in unstable revenue streams that undermine long-term planning.

He added that the situation had been compounded by rising debt-service obligations, which consume a large portion of government revenue and limit the capacity for public investment across all tiers of government.

Against this background, he described the stakeholders’ discourse as timely and necessary, noting that it provided a platform to build consensus around reforms introduced under the Nigeria Tax Act, 2025.

“Bearing these in mind, the National Stakeholders’ Discourse with the theme ‘Enhancing Fiscal Efficiency and Revenue Growth under the Nigeria Tax Act, 2025’ is not only timely but necessary,” he said.

Shehu explained that the new tax law harmonised Nigeria’s previously fragmented tax laws into a single statute, removing duplication and obsolete provisions that had complicated compliance for businesses and individuals.

“The Nigeria Tax Act, 2025, has not only harmonised Nigeria’s fragmented tax laws into a single statute, but it has also reduced or eliminated duplication and obsolete provisions while enhancing ease of doing business,” he said.

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According to him, when the Act comes into effect on January 1, 2026, it will reduce compliance burdens, create a more coherent and predictable fiscal environment, and eliminate regional differences in tax administration. He described the legislation as a call to action for revenue institutions and a signal of the government’s commitment to building a fair, effective, and sustainable revenue system.

The RMAFC chairman also linked the improving revenue profile to broader macroeconomic developments under the current administration.

He said inflation had declined consecutively over four months, falling from 21.88 per cent in July to 16.05 per cent in October, while the naira strengthened from N1,534 to the dollar in July to N1,428 in October.

He added that economic growth had been driven largely by the services and non-oil sectors, even as oil continued to dominate export earnings. “Oil still accounts for over 90 per cent of export earnings, yet contributes less than 10 per cent to gross domestic product,” he said, stressing the need to deepen non-oil revenue mobilisation.

On the role of the commission, Shehu said RMAFC would intensify monitoring of revenue collections and disbursements from the Federation Account through enhanced oversight, forensic audits, and closer collaboration with subnational governments.

“The decision by the commission to convene this programme at this time is aimed at bringing all stakeholders, including organised labour, to have a deep discussion and understanding of the implementation of the Act,” he said.

In his presentation, Chairman of the Tax Reform Committee, Professor Taiwo Oyedele, called for a simplification of Nigeria’s tax structure, arguing that efficiency mattered more than the number of taxes in operation.

He said Nigeria currently operated more than 60 different taxes and levies, many of which were poorly administered.

“If it is only two taxes that are efficiently collected or operated, it is better than 50 of them that are not properly harnessed,” Oyedele said, adding that the multiplicity of taxes encourages corruption. He disclosed that under the new tax law, basic consumption items would not be taxed, while investors would enjoy exemptions from capital gains tax.

Oyedele, who also chairs the Presidential Fiscal Policy and Tax Reforms Committee, said the Nigeria Tax Act, 2025, was designed to correct decades of structural weaknesses in the tax system and promote fairness, efficiency, and economic growth. He said incremental fixes had failed to address deep-rooted problems.

“These reforms should have been done 20 or 30 years ago. Things got so bad with our tax system that incremental fixing would no longer solve the problem. We needed a transformation,” he said.

According to him, the reforms repealed major existing tax laws and replaced them with new ones to end what he described as “taxing poverty, capital, and investments” using outdated statutes inherited from the colonial era. He said the core objectives of the reforms include fairness, harmonisation, ease of doing business, transparency in the use of tax revenues, and overall economic development.

Oyedele said the reforms were deliberately structured to improve efficiency rather than introduce new taxes, warning that the proliferation of levies across tiers of government had created leakages, corruption, and heavy burdens on small businesses and vulnerable citizens.

He disclosed that from January 2026, low-income earners, including those on the national minimum wage, would be exempted from personal income tax, while middle-income earners would benefit from reduced PAYE obligations.

He added that the reforms would also lower living costs by zero-rating essential consumptions such as food, transport, health, education, and rent for value-added tax. According to him, businesses would be refunded VAT incurred in producing such goods to prevent hidden taxes from being passed on to consumers.

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“We found a wide tax gap in Nigeria. Many people were not paying the right amount of tax based on the law. When you fix that problem and remove wasteful incentives, you make more money and make the economy work better,” Oyedele said, adding that most investors in the capital market would be exempted from capital gains tax to deepen the market and support long-term growth.

He cautioned against misinformation surrounding the reforms, noting that false narratives had previously triggered panic and eroded public trust.

Also speaking at the discourse, the National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Dr Jani Ibrahim, described the Nigeria Tax Act, 2025, as a major step towards strengthening revenue mobilisation and promoting fiscal sustainability. In a goodwill message, he commended RMAFC for convening what he described as a high-level engagement at a pivotal moment in Nigeria’s economic journey.

Ibrahim said a modern, efficient, and equitable tax system was critical to economic growth, noting that clear and predictable tax policies would enable businesses to invest, expand, and create jobs, while boosting national revenue.

He also welcomed the commission’s emphasis on collaboration, transparency, and evidence-based policymaking as foundations for trust between government and the private sector.

In a goodwill message, the Governor of the Central Bank of Nigeria, Mr Olayemi Cardoso, represented by the Deputy Governor for Financial System Stability, Mr Philip Ikeazor, said the reforms would broaden the tax base, improve compliance, and reduce Nigeria’s dependence on oil revenues. He added that the measures would also strengthen transparency through a modernised and digitalised tax administration system.

Earlier, Chairman of the Fiscal Efficiency and Budget Committee of RMAFC, Desmond Akawor, said the Nigeria Tax Act represented a major reform milestone aimed at modernising tax administration, strengthening compliance frameworks, closing revenue leakages, and expanding the revenue base. 

“For these reforms to achieve their intended outcomes, active participation, cooperation, and a shared understanding among stakeholders remain indispensable,” he said.