False allegation of hidden spending, diversion of federation revenue – Presidency

By JAMIU JAMODU

The attention of the Federal Ministry of Finance has been drawn to recent media reports and commentaries that misrepresent the findings of the latest Nigeria Development Update by the World Bank, particularly claims suggesting that a significant portion of federation earnings is being “diverted” or constitutes “hidden spending.”

These interpretations misrepresent the World Bank’s analysis and reflect a misunderstanding of the fiscal system.

MISINTERPRETATION OF FAAC DEDUCTIONS

The misreporting in question incorrectly characterises Federation Account Allocation Committee (FAAC) deductions as “waste” or missing funds. This is incorrect.

FAAC deductions, as presented in the World Bank report, include:

Statutory transfers,

Savings and investments,

Security-related expenditures,

Cost-of-collection charges,

Refunds to Ministries, Departments and Agencies (MDAs),

Transfers and interventions benefiting subnational governments.

It is important to emphasise that refunds and transfers to states and other tiers of government are not leakages. They represent legitimate fiscal flows, including repayments of obligations and statutorily backed allocations.

SELECTIVE USE OF OUTDATED DATA

Some commentaries selectively relied on past data while ignoring the forward-looking analysis and ongoing public financial management reforms highlighted in the report.

The World Bank explicitly notes that reforms implemented in early 2026, including the recently signed Executive Order to safeguard remittance of petroleum revenues, are already addressing concerns around deductions, and are expected to improve transparency while increasing revenues available to all tiers of government by about 0.4% of GDP annually.