The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, says state and local governments collectively receive about 85 per cent of Nigeria’s resources, leaving the Federal Government with 15 per cent despite its extensive responsibilities.
He made the statement on Thursday October 22, 2026 at Chatham House in London, during a discussion on Nigeria’s economic outlook, progress on reforms and prospects for inclusive growth.
He said the federal government was the most deprived tier of government in terms of resources relative to the responsibilities it was expected to fulfil, including defence, internal security, foreign affairs and the conduct of elections.
Oyedele said the federal government also became involved in basic education and primary healthcare, adding that it needed more resources to effectively discharge its responsibilities.
“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 sub-national; only 15 percent to the federal government.
“In Nigeria, the federal government collects no income tax from individuals,” Oyedele said.
He cited the distribution of Value-Added Tax (VAT), saying 90 per cent goes to state governments, while the federal government receives 10 per cent.
The Minister said states also retain revenue from stamp duties, while the federal government relies only 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 added.
Nigeria’s current revenue allocation formula generally assigns 52.68 per cent of revenue to the federal government, 26.72 per cent to state governments and 20.60 per cent to local governments.
The Senate, on February 3, initiated the process of amending relevant provisions of the 1999 Constitution to increase the federal government’s revenue allocation through an upward review of the existing formula.
Despite receiving the largest share under the current formula, the Senate said the federal government required additional revenue to meet its expanding responsibilities.
Oyedele said the federal government planned to transfer some responsibilities to states, noting that they were better positioned to perform them, while improving the centre’s ability to generate revenue without imposing an additional burden on Nigerians.
“That way, you have extra resources to influence decisions at the sub-national level. It’s called federal transfers,” the minister said.
Under the proposed arrangement, he said, the federal government could provide funding to states to improve basic education, support agriculture and build access roads linking farms to markets.
Oyedele said such transfers could encourage states to prioritise projects with direct economic and social benefits rather than spend heavily on other infrastructure.
