The Minister of Finance and Coordinating Minister of the Economy, Prof. Taiwo Oyedele, has urged Nigerian states to reduce their dependence on federal allocations and develop sustainable sources of revenue to drive economic growth.
Oyedele made the call at the 2026 National Council on Finance and Economic Development (NACOFED) conference in Owerri, Imo State, on Wednesday.
He said Nigeria needs to move from an allocation-dependent economy to one driven by production, investment and job creation, while calling for stronger fiscal federalism, improved internally generated revenue and economic diversification.
According to the minister, economic reforms, including the removal of fuel subsidy and the unification of the foreign exchange market, have significantly increased revenues available for distribution through the Federation Account.
He said monthly Federation Account allocations, which ranged between N300bn and N600bn before 2023, have now risen above N2tn.
Oyedele disclosed that the reforms generated an estimated N15.8tn in additional resources between June 2023 and December 2025. The Federal Government received N5.43tn, states received N6.52tn, while local governments received N3.88tn.
However, he stressed that the reforms did not leave the Federal Government with a huge pool of cash, explaining that the additional resources were absorbed by increased government expenditure.
The Federal Government generated about N20.4tn in additional resources during the period through subsidy-related savings, increased revenue and borrowing, but spent approximately N30.64tn on wages, debt servicing, infrastructure, electricity subsidy and other obligations.
Oyedele said the figures represented a financing story rather than simply a savings story, adding that the reforms reduced the government’s fiscal pressure and the amount it would otherwise have needed to borrow.
Wage bill exceeds subsidy savings
The minister disclosed that the Federal Government spent N9.39tn on wages during the period, largely due to the new national minimum wage, wage awards, allowances and other personnel costs.
Another N9.37tn went into external debt servicing, reflecting the increased naira cost of servicing foreign-currency obligations following exchange rate depreciation.
He said N6.47tn was invested in strategic infrastructure covering areas such as transport, housing, agriculture and security, while N3.14tn was spent on electricity subsidies to cushion consumers from higher tariffs.
Oyedele explained that the Federal Government continues to borrow because its revenue remains insufficient to cover total expenditure.
He said the removal of subsidy reduced the amount of borrowing required but did not eliminate the need for government borrowing.
How the resources were deployed
Oyedele said funds generated through the reforms had supported salary increases, timely payment of salaries and pensions, settlement of pension arrears and gratuities, expansion of the Nigerian Education Loan Fund (NELFUND), as well as affordable credit programmes for consumers and small and medium-sized businesses.
He listed major infrastructure projects funded during the period, including the Lagos-Calabar Coastal Highway at N2.23tn, Sokoto-Badagry Super Highway at N1.11tn, Trans-Sahara Super Highway at N489.2bn and the Road Emergency Intervention Project at N366bn.
Abu Dhabi loan
The Director-General of the Debt Management Office (DMO), Patience Oniha, said the Federal Government’s financing arrangement with First Abu Dhabi Bank was part of efforts to diversify Nigeria’s funding sources and secure financing on favourable terms.
She said the transaction followed due process, received National Assembly approval and complied with the Fiscal Responsibility Act.
Meanwhile, Imo State Governor, Senator Hope Uzodimma, said his administration was investing in agriculture, the digital economy, power and infrastructure to diversify the state’s economy.
Uzodimma, represented by his deputy, Dr Chinyere Ekomaru, urged states to be deliberate in developing alternative economic sectors.
Atiku demands explanation of Federation revenues
Meanwhile, the presidential candidate of the opposition African Democratic Congress (ADC), Atiku Abubakar, has challenged President Bola Tinubu to account for about N30tn in Federation revenues, deductions, savings and transfers.
In a statement issued by his Senior Special Assistant on Public Communication, Phrank Shaibu, Atiku said the government should provide a comprehensive reconciliation of revenues and fiscal gains associated with the removal of petroleum and energy subsidies.
He argued that Nigerians were promised that the painful reforms would free resources for development and demanded greater transparency over how the funds had been used.
Atiku said his earlier analysis of published Federation Account figures had identified about N28tn requiring explanation up to June 2026, while the July figures had raised the amount requiring reconciliation towards N30tn.
He noted that gross statutory revenue for July 2026 stood at N4.359tn, while the Federation Account Allocation Committee approved the distribution of N3.007tn to the Federal Government, 36 states and 774 local government councils.
Atiku called for a detailed reconciliation of the revenues flowing into the Federation Account and deductions made before funds were distributed.
