The Minister of Finance and Coordinating Minister of the Economy, Prof. Taiwo Oyedele, has said federal allocations alone cannot guarantee prosperity for states, charging state governments to develop sustainable revenue sources and drive economic growth from within.
Oyedele disclosed that Nigeria recorded estimated savings of N15.8 trillion from the removal of fuel subsidy and the liberalisation of the foreign exchange market between June 2023 and December 2025, but insisted the reforms did not leave the Federal Government with the huge cash surplus widely believed.
He noted that the government’s wage bill alone gulped more than the entire subsidy savings, even as he maintained that the reforms had helped ease the country’s borrowing burden.
States Urged to Look Beyond Allocations
Speaking at the 2026 National Council on Finance and Economic Development (NACOFED) conference in Owerri, Imo State, on Wednesday, Oyedele stressed the need for states to look beyond federal allocations and build productive capacity for sustainable development.
“Nigeria must move from an allocation-dependent economy to one driven by production, investment and job creation,” he said, calling for stronger fiscal federalism, improved revenue generation and economic diversification to boost the country’s resilience to economic shocks.
He explained that recent reforms, including subsidy removal and FX unification, have significantly boosted revenue available for distribution through the federation account, with monthly allocations now above N2 trillion, up from between N300 billion and N600 billion before 2023.
Of the N15.8 trillion realised from the reforms, the Federal Government received N5.43 trillion, states got N6.52 trillion, while local government councils received N3.88 trillion, he said.
A Financing Story, Not a Savings Story
Oyedele disclosed that the Federal Government generated an additional N20.4 trillion during the period from subsidy savings, increased revenue and borrowing, but spent N30.64 trillion on wages, debt servicing, infrastructure, electricity subsidy and other obligations.
“The figures tell a financing story, not simply a savings story,” he said, explaining that the subsidy savings only eased fiscal pressure and reduced the amount the government would otherwise have had to borrow.
According to him, the N15.8 trillion was never retained solely by the Federal Government but shared across the three tiers of government and other statutory beneficiaries. Combined with N3.12 trillion in other incremental revenues and N11.85 trillion in incremental borrowing, the FG had about N20.4 trillion in incremental resources against N30.64 trillion in additional expenditure.
“Subsidy removal, therefore, did not create one large pool of cash available to the federal government. It simply reduced a major fiscal burden and the amount of borrowing that would otherwise have been required,” he added.
Wage Bill Outstrips Subsidy Savings
Oyedele revealed that the Federal Government spent N9.39 trillion on wages during the review period, driven largely by the new national minimum wage, wage awards, allowances and other personnel costs.
He added that N9.37 trillion went into servicing external debt due to the higher naira cost of meeting foreign currency obligations following the exchange rate depreciation, while N6.47 trillion was invested in strategic infrastructure covering transport, housing, agriculture and security. Another N3.14 trillion went into electricity subsidy to cushion consumers from higher tariffs.
On why the government continues to borrow despite the reforms, Oyedele said revenue remains inadequate to finance expenditure. “Subsidy removal resulted in less borrowing than would otherwise have been required, rather than eliminating the need to borrow,” he said.
Funds Channelled into Welfare, Infrastructure
Oyedele said resources from the reforms have been deployed into programmes aimed at improving citizens’ welfare and supporting growth, including salary increases, prompt payment of salaries and pensions, settlement of pension arrears and gratuities, expansion of the Nigerian Education Loan Fund (NELFUND), and affordable consumer and SME credit schemes.
Major infrastructure projects funded during the period include the Lagos-Calabar Coastal Highway (N2.23 trillion), Sokoto-Badagry Super Highway (N1.11 trillion), Trans-Sahara Super Highway (N489.2 billion), and the Road Emergency Intervention Project (N366 billion).
Abu Dhabi Loan Meant to Diversify Funding — DMO
Responding to questions on the Federal Government’s loan arrangement with First Abu Dhabi Bank, the Director-General of the Debt Management Office (DMO), Ms Patience Oniha, said the facility was part of efforts to diversify Nigeria’s funding sources and secure financing on more favourable terms, noting that the transaction followed due process, including National Assembly approval and full compliance with the Fiscal Responsibility Act.
Imo State Governor, Senator Hope Uzodimma, represented by his deputy, Dr Chinyere Ekomaru, said his administration was investing in agriculture, the digital economy, power and infrastructure to diversify the state’s economy, stressing that states must be deliberate about economic diversification.
Atiku Demands Account of N30trn Federation Revenue
Meanwhile, presidential candidate of the African Democratic Congress (ADC), Atiku Abubakar, has challenged President Bola Tinubu to account for about N30 trillion in Federation revenues, deductions, savings and transfers requiring transparent reconciliation, saying the latest July 2026 Federation Account figures show the troubling pattern has continued.
In a statement by his Senior Special Assistant on Public Communication, Phrank Shaibu, Atiku said the administration must account for revenues and fiscal gains from the removal of petroleum and energy subsidies, insisting Nigerians were promised the reforms would free up resources for development.
“President Tinubu did not ask Nigerians to endure the agony of subsidy removal so that the proceeds could become unexplained stashed funds beyond public scrutiny. The savings and additional revenues generated by these reforms belong to the Nigerian people. They are not the private reserves of the Presidency or any government agency. Where is the subsidy-removal windfall?” he queried.
Atiku said his earlier reconciliation of published Federation Account figures had identified about N28 trillion requiring explanation up to June 2026, but fresh July figures have pushed the cumulative amount requiring public accounting towards N30 trillion.
He disclosed that for July 2026, gross statutory revenue stood at N4.359 trillion, while the Federation Account Allocation Committee (FAAC) approved a total distribution of N3.007 trillion to the Federal Government, 36 states and 774 local government councils.
“The question President Tinubu must answer remains painfully simple: Where is the money?” Atiku said, insisting Nigerians deserve a comprehensive reconciliation of the enormous revenues flowing into the Federation Account and the deductions made before distribution.
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