By Obinna Uballa
The federal government has said there’s already a plan to curb the issue of excessive revenue retention by federal agencies.
This is as the World Bank raised concerns over what it describes as the disproportionately high share of revenue retained by Nigeria’s major revenue-generating agencies compared to similar institutions across Africa.
In its latest Nigeria Development Update (NDU) report released on Wednesday, the Bank identified the Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) as some of the biggest beneficiaries of Nigeria’s generous retention structure.
Other agencies drawing directly from federally collected revenues include the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Niger Delta Development Commission (NDDC), Nigerian National Petroleum Company (NNPC) Limited, and the Frontier Exploration Fund.
According to the World Bank, these allocations are “very high” compared to peer nations, adding that the system weakens fiscal discipline and transparency.
Under the current framework, the FIRS retains 4 percent of all non-oil gross revenues, including value-added tax (VAT), corporate income tax, and electronic money transfer levies, as well as oil revenues excluding royalties.
The NCS keeps 7 percent of customs and excise revenues and 2 percent of VAT collections, while the RMAFC receives 0.5 percent of non-oil revenues. The NDDC gets 3 percent of gross VAT revenues, and the NUPRC retains 4 percent of royalties from upstream petroleum operations.
Additionally, both the Frontier Exploration Fund and the NNPC Limited are entitled to 30 percent of production-sharing contract (PSC) revenues, a structure the Bank says is far more generous than those in comparable economies.
In contrast, the Kenya Revenue Authority (KRA) receives between 1 and 2 percent of its annual revenue target approved at the budget stage and can only earn a 3 percent performance bonus for exceeding targets.
Revenue bodies in Uganda, Ghana, and South Africa, the Bank noted, are funded directly through parliamentary appropriations rather than automatic deductions from collected revenues.
The World Bank said Nigeria’s system of allowing multiple agencies to draw directly from revenue collections “undermines transparency, weakens budgetary control, and limits funds available for national investment.”
Speaking at the report’s launch in Abuja, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed that the federal government plans to end the practice of revenue deductions by agencies.
He said President Bola Tinubu had already directed the finance ministry to review all revenue retention practices to ensure greater accountability and free up more funds for development.
The directive, issued on August 13, forms part of Tinubu’s broader fiscal reforms aimed at boosting revenue, improving efficiency, and accelerating economic growth.
