- All generated funds must go to FAAC, says Edun
Revenue-generating agencies will no longer keep a part of the funds, the Federal Government said yesterday.
The long-standing practice of cost-of-revenue-collection deductions has ended.
The move, according to the government, is aimed at promoting fiscal transparency and ensuring that more funds are available for national and subnational governments.
Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, said this yesterday in Abuja during the launch of the National Development Update.
He explained that while Nigeria’s gross revenues have continued to rise, a substantial portion of the proceeds has been deducted as the cost of collection by agencies such as the Federal Inland Revenue Service (FIRS), the Nigeria Customs Service (NCS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
These deductions, he said, have not translated into tangible improvements in national development.
Edun said the review of the deductions is part of a broader fiscal reform agenda mandated by President Bola Tinubu.
“Funds have flowed to the Federation Account, but the point is this — efficiency of that spending is critical,” he said.
“We have been mandated by His Excellency, Mr. President, to take a look at deductions — not just those for the cost of collection, but deductions generally.”
The minister noted that such deductions significantly reduce the actual amount distributable to the three tiers of government.
“When you look at the gross figure, you see all kinds of deductions before you get to the net distributable figure, which goes to the federal, state, and local governments.
“And I must inform you that even during the last FAAC allocation, most of those deductions have been removed once and for all,” he stated.
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According to him, the administration is now strictly enforcing the constitutional provision that mandates all revenues to be paid into the Federation Account before distribution according to the approved formula.
“The Constitution says that funds should flow from revenue-collecting agencies into the Federation Account and be distributed according to the set formula — and that is what is now being done,” he added.
Edun emphasised that the government’s fiscal reform drive is anchored on transparency, accountability, and efficient allocation of public resources to accelerate development at both the federal and state levels.
Beyond fiscal discipline, the minister also addressed ongoing social protection efforts, describing them as central to President Tinubu’s Renewed Hope Agenda.
He acknowledged that economic reforms have caused short-term hardship by raising the cost of living, but assured that measures are in place to protect vulnerable Nigerians.
“The promise was that they would not be left to their own; they would not be left behind,” Edun said.
“We made sure that each person who benefits is biometrically and uniquely identified by name.
“Kudos to the management of the Nigerian Identity Management Company.”
He explained that the social safety net programme uses a digital payment system to ensure transparency and accountability in delivering cash transfers to beneficiaries.
“Once we had put in place the right technology and methodology, the programme took off.
“We are still implementing the first stage of the social safety net — the direct benefit transfers.
“By the end of October, we will have covered about 10 million households, reaching 50 million Nigerians.
“Long before the end of the year, the commitment is to have completed 50 million households,” he said.
Edun also revealed that the National Economic Council has approved a ward-based development programme across Nigeria’s 8,809 wards to ensure that the benefits of reforms are felt at the grassroots.
“That is where the connection will be — bringing the gains home, drilling down to ensure all Nigerians participate in a growing, stable, and positive trajectory of the Nigerian economy,” he said.
The cost-of-collection arrangement, which the government now seeks to end, has historically served as a funding mechanism for revenue-generating agencies.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) retains about four per cent of royalties, rents, and other revenues it collects on behalf of the Federation Account.
Similarly, the Federal Inland Revenue Service (FIRS) retained N254.82 billion in 2024 and is projected to receive N43.83 billion for the first half of 2025 as the cost of collection.
Until recently, the Nigeria Customs Service (NCS) received a seven per cent cost of collection from the Federation Account.
However, this was replaced in August 2025 with a four per cent Free on Board (FOB) levy on imports, following a directive by the House of Representatives.
The new levy now serves as the primary source of funding for Customs operations.
With the planned review and eventual removal of these deductions, the Federal Government aims to improve fiscal discipline, strengthen the Federation Account, and channel more resources toward infrastructure, social welfare, and sustainable development.
