Nigeria vs World Bank:
* FAAC deductions misinterpreted, says Finance Ministry
Nigeria has firmly rejected allegations of hidden spending and diversion of federation revenue of about ₦34.44 trillion out of N84 trillion in three years, saying that recent media interpretations of the World Bank’s Nigeria Development Update are inaccurate and based on a misunderstanding of the country’s fiscal framework.
In a detailed press statement issued on Sunday, the Minister of State for Finance, Taiwo Oyedele, said claims that a substantial portion of federation earnings is being “diverted” or constitutes “hidden spending” misrepresent the World Bank’s findings and risk misleading the public.
The ministry explained that much of the controversy stems from the mischaracterisation of deductions made by the Federation Account Allocation Committee (FAAC), which some commentators have described as waste or unaccounted funds. According to the ministry, such deductions are legitimate fiscal transactions embedded in Nigeria’s public finance system.
It listed key components of FAAC deductions to include statutory transfers, savings and investments, security-related expenditures, cost-of-collection charges, refunds to Ministries, Departments and Agencies (MDAs), as well as transfers and interventions that directly benefit states and other tiers of government.
The statement stressed that refunds and transfers to subnational governments should not be misconstrued as leakages. Rather, they represent lawful fiscal flows, including repayments of prior obligations and allocations backed by statutory provisions.
“The interpretation that these funds are missing or wasted is incorrect and does not reflect the structure of Nigeria’s fiscal operations,” the ministry said.
Addressing what it described as selective reporting, the ministry criticised the reliance by some analysts on outdated data while ignoring recent reforms and forward-looking projections highlighted in the World Bank report. It noted that the report itself acknowledged ongoing improvements in public financial management.
Among such measures is a recently signed executive order aimed at safeguarding the remittance of petroleum revenues into the federation account. The ministry said the reform is already addressing concerns around deductions and is projected to enhance transparency while boosting distributable revenues to all tiers of government by approximately 0.4 per cent of Gross Domestic Product (GDP) annually.
The ministry further pointed to broader macroeconomic indicators cited in the report, describing them as evidence that ongoing reforms are yielding positive results. These include more broad-based economic growth across sectors, a gradual decline in inflation driven by policy interventions, and a stronger external position supported by improved foreign reserves and a current account surplus.
It also highlighted an improvement in Nigeria’s debt metrics, particularly a reduction in the debt-to-GDP ratio — the first such decline recorded in over a decade — as a sign of strengthening fiscal sustainability.
Contrary to some public narratives, the ministry emphasised that the World Bank did not conclude that Nigeria’s fiscal system is collapsing or that reforms have failed. Instead, it said the report affirms that current policy measures are working but require sustained implementation and deepening to translate macroeconomic stability into inclusive and broad-based economic growth.
“The real message of the report is one of cautious optimism,” the statement noted, adding that continued reforms are essential to consolidate gains and improve living standards.
Reaffirming the Federal Government’s commitment to transparency and accountability, the ministry said it remains focused on strengthening revenue mobilisation, improving the efficiency of public spending, and ensuring that fiscal policies support long-term economic growth.
It also called on media organisations, analysts, and the public to engage constructively with fiscal information and avoid misinterpretations that could undermine confidence in Nigeria’s economic reform programme.
“Accurate understanding and responsible reporting of fiscal developments are critical to sustaining public trust and supporting Nigeria’s reform trajectory,” the ministry stated.
