The 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.
Gatekeepers News reports that 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 was the most resource-constrained tier of government relative to its responsibilities, which include defence, internal security, foreign affairs and the conduct of elections.
According to the minister, the Federal Government also intervenes in basic education and primary healthcare, increasing its need for resources to deliver essential services.
“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.
He added that the Federal Government does not collect personal income tax directly from individuals, highlighting what he described as limitations in its revenue-generating capacity.
“In Nigeria, the federal government collects no income tax from individuals,” he said.
Oyedele also cited the distribution of value-added tax (VAT), saying state governments receive 90 per cent while the Federal Government gets 10 per cent.
He noted that states also retain revenue from stamp duties, while the Federal Government relies on its share of the Federation Account.
“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 said.
Under Nigeria’s current revenue allocation formula, the Federal Government receives 52.68 per cent of distributable revenue, state governments get 26.72 per cent, while local governments receive 20.60 per cent.
The Senate initiated a process on February 3 to amend relevant provisions of the 1999 Constitution to increase the Federal Government’s share of revenue through a review of the existing allocation formula.
The proposal followed concerns that the Federal Government needed additional resources to meet its expanding responsibilities despite its existing share of federally distributable revenue.
FG Plans to Transfer Some Responsibilities to States
Oyedele said the Federal Government was considering transferring some responsibilities to state governments, arguing that subnational authorities were better positioned to carry them out.
He said the move would also help improve the Federal Government’s capacity to generate revenue without placing additional financial 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, he explained, the Federal Government could provide targeted funding to states to improve basic education, support agriculture and construct access roads linking farms to markets.
According to Oyedele, such transfers could encourage state governments to prioritise projects with direct economic and social benefits for their residents.
He suggested that targeted federal funding could help align spending at the subnational level with national development objectives while allowing the Federal Government to focus on its core responsibilities.
The proposed approach forms part of broader discussions on fiscal federalism, revenue distribution and how Nigeria’s different tiers of government can better finance public services and stimulate inclusive economic growth.
