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Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has said state and local governments receive about 85 per cent of Nigeria’s resources, leaving the Federal Government with 15 per cent despite its extensive responsibilities.
Oyedele spoke on Wednesday at Chatham House in London during a discussion on Nigeria’s economic outlook, ongoing reforms and prospects for inclusive growth.
He argued that the Federal Government had the most responsibilities but was the most deprived of resources, citing defence, internal security, foreign affairs and the conduct of elections. He added that the centre also intervened in basic education and primary healthcare.
“Based on data, the center is the most deprived of resources yet it has the most responsibilities. Of all Nigerian resources, roughly 85 percent are assigned to subnational. Only 15 percent to the federal government,” Oyedele said.
“In Nigeria, the federal government collects no income tax from individuals.”
The minister also cited the distribution of value-added tax (VAT), saying states receive 90 per cent of the proceeds while the Federal Government gets 10 per cent. He added that states retain revenue from stamp duties, while the centre relies on its share of the Federation Account.
Explaining the existing revenue allocation formula, which gives the Federal Government 52.68 per cent, states 26.72 per cent and local governments 20.60 per cent, Oyedele said the Federal Government’s share was calculated from a smaller portion of revenue.
“When they talk about the formula of 52 point something percent of federal government, what they are not telling you is that 52 point whatever percentage is a percentage of a smaller portion of the federation account,” he added.
The Senate initiated moves on February 3 to amend relevant provisions of the 1999 Constitution to increase the Federal Government’s share of revenue, arguing that it needed more funds to meet its expanding responsibilities.
Oyedele also said the Federal Government planned to transfer some responsibilities to states, which he described as better positioned to handle them, while improving the centre’s revenue-generating capacity without imposing additional burdens on Nigerians.
“That way you have extra resources to influence decisions at the subnational level. It’s called federal transfers,” the minister said.
Under the proposed arrangement, the Federal Government could fund state-level projects in basic education, agriculture and access roads linking farms to markets. Oyedele said the transfers could encourage states to prioritise projects with direct economic and social benefits.
