Few milestones carry as much weight as the health of the Federation Account (the proverbial 'fiscal lifeline' that sustains the three tiers of government) in the ever-evolving landscape of Nigeria’s fiscal architecture. As the curtains draw on the 2025 fiscal year, the narrative emerging from the Office of the Accountant-General of the Federation (AGF) is one of record-breaking numbers, structural shifts, and a cautious but undeniable optimism.
At the heart of this story is a staggering figure; ₦35 trillion. This represents the total inflow into the Federation Account for 2025, a monumental 29.6% leap from the ₦27 trillion recorded in 2024. But beyond the sheer volume of the 'Naira rain', this ₦8 trillion surplus tells a deeper story of a nation undergoing a painful but necessary fiscal rebirth.
As we at Growing Nigeria have consistently championed, the path to sustainable prosperity is paved not with the volatile 'easy money' of crude oil, but with the grit of structural reforms and the broadening of our internal revenue base.
The disclosure came during the Federation Account Allocation Committee () Post-Mortem Sub-Committee Retreat held in the historic city of Enugu. Under the theme 'Assessing Fiscal and Sectoral Policies for Closing Revenue Leakage in the Federation Account', policymakers gathered to dissect what went right, and what still keeps the nation’s treasury guardians awake at night.
Representing the Accountant-General of the Federation, Dr. Shamseldeen Ogunjimi, the Director of the Federation Account, Mrs. Rita Okolie, painted a picture of an economy that is finally starting to respond to the bitter medicine of President Bola Tinubu’s administration.
"The 2025 progress is undeniable," she noted. "It serves as evidence of the efficacy of the fiscal reforms initiated to build a more resilient economy, one that is gradually reducing its historical over-reliance on volatile oil receipts."
But how did Nigeria find an extra ₦8 trillion in just twelve months? The answer lies in a multi-pronged approach to revenue mobilization.
The Shift to non-oil dominance: For decades, Nigeria was a mono-product economy. When oil prices sneezed, the Federation Account caught pneumonia. However, 2025 marked a watershed moment where non-oil revenues; driven by VAT, Company Income Tax (CIT), and improved Customs collections, began to provide a more stable foundation.
Harmonization and digitization: The Nigeria Revenue Service (NRS) reported exceeding its ₦25.2 trillion target, hitting ₦28.3 trillion. This was largely credited to 'administrative enhancements', a polite term for closing the gaps through technology. Digital tracking and the broadening of the withholding tax system have made it harder for revenue to vanish into the 'black holes' of bureaucracy.
The exchange rate and subsidy factors: While these reforms have been the subject of intense public debate due to their impact on the cost of living, their effect on the Federation Account is clear. The removal of the fuel subsidy and the unification of the exchange rate have funneled trillions back into the central pool; money that previously evaporated into unproductive subsidies or the pockets of arbitrageurs.
The shadows in the ledger: addressing systemic leakages
Despite the celebratory tone of the ₦35 trillion milestone, Dr. Ogunjimi was quick to issue a stern warning: the bucket is still leaking. Revenue leakages are not just abstract accounting errors; they are "lost opportunities for development." In the words of the Accountant-General, "Every Naira lost is a school not built, a road unfinished, or a vital service delayed."
The office of the AGF identified three critical junctions where the nation continues to lose its wealth:
Collection gaps: Where taxes and levies are either under-assessed or bypassed entirely at the source.
Remittance delays: Where funds collected by agencies take an unnecessarily long "scenic route" before arriving in the Federation Account.
Expenditure oversight: Where the monitoring of how these funds are utilized after distribution remains suboptimal.
The Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Shehu, echoed these concerns. He pointed out that while gross inflows are rising, 'first-line charges' and complex financing arrangements often reduce the net amount available for distribution to States and Local Governments. For the average Nigerian living in a rural municipality, it is the net distributable revenue (not the gross figure) that determines if a health clinic gets stocked with medicine.
Keen observers believe that ₦35 trillion is a milestone, not a destination. The 2025 performance provides a much-needed 'fiscal cushion' for the 2026 budget cycle, but the sustainability of this growth depends on three pillars:
1. Transparency as a tool for trust: The 'Post-Mortem' nature of the FAAC retreat is vital. We must move toward a system where every Nigerian can track the movement of these trillions in real-time. Transparency is the greatest antidote to the 'leakages' identified by the AGF.
2. Supporting the sub-nationals: With record FAAC disbursements crossing the ₦2 trillion monthly mark for the first time in mid-2025, the focus must now shift to the states. If the Federation Account is the 'lifeline', the States and Local Governments are the 'limbs' that must carry the weight of development. Increased revenue at the center must translate to visible projects at the grassroots.
3. Deepening the non-oil base: The is expected to further harmonize our fragmented tax laws. By making it easier to do business and reducing the 'taxing of poverty', the government can expand the net without strangling the small businesses that are the engine of our growth.
The jump to ₦35 trillion is more than just a win for the gate-keepers in Abuja. It is a signal to the world that Nigeria is getting its house in order. It reflects a nation that is finally learning to live within its means, optimize its assets, and demand accountability from its revenue-generating agencies.
However, as we celebrate this growth, we must remain vigilant. The 'distortions' in fiscal programmes and the structural constraints mentioned by the RMAFC chairman remind us that the work is far from over.
The goal for 2026 should not just be to hit ₦40 trillion or ₦50 trillion. The goal must be to ensure that every kobo of that ₦35 trillion is accounted for, efficiently remitted, and wisely spent. Only then can we truly say that Nigeria is not just growing on paper, but growing in the lives of its 200 million citizens.
The fiscal lifeline is strong; now, we must ensure it pumps life into every corner of the federation.