Nigeria may be losing between N15 trillion and N20 trillion annually to systemic revenue leakages, worsening the country’s debt burden despite rising government earnings, according to a policy paper released by Olisa Agbakoba and his firm, Olisa Agbakoba Legal.
The report, unveiled in Lagos and titled “The Federation Account of Nigeria and Infinite Possibilities: A Framework for Full Remittance and Fiscal Accountability,” blamed the country’s fiscal crisis on the persistent failure to fully implement Section 162(1) of the 1999 Constitution, which mandates that all federally collected revenues be paid into the Federation Account before any deductions are made.
According to the paper, Nigeria’s economic condition reflects a “revenue paradox,” where increasing national earnings have failed to translate into fiscal stability, improved public services, or reduced borrowing.
The report stated that federation revenues rose from N16.8 trillion in 2023 to N31.9 trillion in 2024 and are projected to continue growing. However, despite the increase, Nigeria’s public debt climbed to N159.27 trillion by the end of 2025.
It further noted that debt servicing consumed 78 per cent of federal revenue in 2023 and 69 per cent in 2024, figures significantly above the 30 to 40 per cent sustainability threshold recommended for developing economies.
According to the paper, the problem is not inadequate revenue generation but structural leakages that prevent substantial portions of government earnings from reaching the Federation Account.
Citing the World Bank’s 2025 Nigeria Development Update, the report disclosed that more than 39 per cent of gross federation revenues, estimated at over N14 trillion, were deducted before remittance in 2025 alone.
The policy paper identified the Nigerian National Petroleum Company Limited as one of the major contributors to the revenue gap, alleging under-remittance and institutional opacity within the oil sector.
According to the report, the company remitted about N600 billion out of N1.1 trillion due in 2024, while retaining the balance to settle legacy obligations.
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Beyond the financial implications, the report argued that the structure of the oil sector creates a conflict of interest because NNPCL simultaneously functions as producer, seller, cost calculator, and remitter of oil revenues.
It recommended separating those responsibilities among independent entities to improve accountability and transparency in the management of oil proceeds.
The paper also raised concerns over crude-for-loan arrangements, revealing that about 213,000 barrels of Nigeria’s daily oil production have been committed to servicing external debts under facilities such as the $3.3 billion Project Gazelle agreement with African Export-Import Bank, alongside Project Yield, Eagle Export Funding, and Project Leopard.
According to the report, several of the agreements lacked explicit approval from the National Assembly and effectively bypassed the Federation Account by directing revenues straight to offshore debt servicing.
While acknowledging Executive Order No. 9 issued by President Bola Ahmed Tinubu in February 2026, which halted some pre-remittance deductions under the Petroleum Industry Act, the report described the move as a positive but limited intervention because it lacks constitutional permanence.
The paper also questioned the legal status of the Treasury Single Account, arguing that the TSA remains an executive initiative without constitutional backing and therefore cannot replace the Federation Account structure established under Section 162.
To address the problem, OAL proposed a constitutional amendment mandating that all revenues be remitted into the Federation Account in gross before any deductions are made.
The report argued that implementing the principle could increase distributable national revenue by between N15 trillion and N20 trillion yearly, reduce dependence on borrowing, and strengthen fiscal transparency.
Speaking during the presentation, Agbakoba blamed Nigeria’s governance challenges on widespread constitutional illiteracy among political office holders.
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According to him, many politicians focus more on winning elections than understanding governance and constitutional responsibilities.
“It does not matter who becomes President, as long as the person understands the Constitution,” he said.
Agbakoba urged Nigerians and the media to scrutinise aspirants ahead of the 2027 elections by testing their understanding of key constitutional provisions, especially Section 162 dealing with the Federation Account.
“The real issue is governance,” he said, warning that without constitutional competence and accountability, policy reforms would continue to fail.
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