ActionAid Nigeria has called for an urgent forensic audit of Nigeria’s revenue management system following revelations that more than N34 trillion was deducted from federal earnings before allocations were shared among the three tiers of government.
In a statement issued on Thursday, the organisation said the magnitude of the deductions—estimated to account for over 40 per cent of federal revenue in recent years—signals deep-rooted weaknesses in public financial management and poses a serious risk to fiscal stability and development financing.
ActionAid cited findings attributed to the World Bank, which reportedly indicate that a substantial portion of government income is absorbed through pre-distribution charges. These include cost-of-collection frameworks and agency remittances, with limited transparency surrounding their composition and utilisation.
“These findings reinforce long-standing concerns about Nigeria’s widening fiscal constraints and rising debt burden,” the organisation said. “The persistence of large-scale revenue leakages represents both a governance failure and a missed opportunity to strengthen fiscal stability.”
According to ActionAid, the deductions—now estimated at over N34 trillion—have increased in tandem with government revenues, leaving federal, state and local governments with reduced distributable income to fund public services.
The group warned that the widening gap between gross earnings and actual allocations is driving increased reliance on borrowing. It referenced projections by the International Monetary Fund (IMF), which suggest Nigeria’s debt-to-GDP ratio could rise to 33.1 per cent by 2027.
“The widening gap between gross revenue and distributable income is constraining development financing and increasing dependence on debt,” the statement added.
ActionAid expressed concern over what it described as “opaque and fragmented” revenue channels, noting that significant portions of national income pass through multiple layers before reaching the Federation Account.
It argued that the absence of detailed public disclosures on the justification, structure and end-use of these deductions raises accountability concerns.
“There is limited transparency on how these funds are managed. This opacity weakens fiscal oversight and undermines public trust in governance,” the organisation stated.
The group also criticised the lack of clarity surrounding certain major public expenditures, including the Nigeria Revenue Service building project, where cost details and procurement processes have not been fully disclosed.
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“Citizens have a right to know how public funds are utilised,” ActionAid stressed, adding that accountability must extend beyond revenue collection to expenditure.
The Country Director of ActionAid Nigeria, Andrew Mamedu, said the consequences of shrinking public revenue are already being felt by citizens struggling with inflation and declining purchasing power.
“For citizens grappling with rising inflation, declining purchasing power and economic hardship, the continued reduction in available public resources means fewer investments in essential services,” Mamedu said.
He warned that weakening fiscal capacity is also exacerbating insecurity, as economic pressures fuel crime, displacement and social instability.
“At a time when livelihoods are becoming more fragile, the erosion of public revenue further limits the government’s ability to respond effectively to these challenges,” he added.
The organisation cautioned that without urgent reforms, Nigeria risks entrenching a system in which public resources are consistently depleted before they can deliver meaningful impact.
“The continued expansion of unchecked deductions poses a direct threat to equitable development, fiscal stability and public trust,” the statement said.
To address the issue, ActionAid urged the federal government to conduct a comprehensive and transparent review of all revenue deduction frameworks to ensure accountability and efficiency.
It demanded the immediate publication of detailed breakdowns of all deductions, stronger independent oversight of revenue-generating agencies, and reforms aimed at eliminating systemic leakages.
The organisation also called on the National Assembly to intensify its oversight role through public hearings and scrutiny of deduction structures. State governments, civil society groups and the media were encouraged to increase advocacy for transparency in public finance management.
“An independent forensic audit of all deduction mechanisms is critical to restoring public confidence,” ActionAid said.
Mamedu concluded that Nigeria’s development trajectory depends not only on revenue generation but on how effectively public resources are managed.
“This is not just a fiscal issue; it is a matter of justice. Every naira that fails to reach essential services denies Nigerians access to healthcare, education and dignity,” he said.