Oyedele: States Control 85% of Nigeria’s Resources, FG Gets 15%

Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has said state and local governments collectively receive about 85 per cent of the country’s resources, leaving the Federal Government with approximately 15 per cent despite its extensive responsibilities.

Oyedele made the disclosure on Wednesday during a discussion on Nigeria’s economic outlook, ongoing reforms and prospects for inclusive growth at Chatham House in London.

He argued that the Federal Government faces a significant imbalance between its revenue allocation and the responsibilities it is expected to discharge, including defence, internal security, foreign affairs and the conduct of elections.

The minister added that the Federal Government also intervenes in basic education and primary healthcare, stressing that adequate funding is necessary for it to perform its duties effectively.

According to him, Nigeria’s revenue-sharing arrangements leave the central government with limited resources relative to its obligations, while subnational governments receive the larger portion.

Oyedele also highlighted the distribution of Value Added Tax (VAT), explaining that state governments receive 90 per cent of the revenue, while the Federal Government gets 10 per cent.

He further noted that states retain revenue from stamp duties, while the Federal Government depends largely on its statutory share of the Federation Account.

The minister explained that the Federal Government’s widely cited 52.68 per cent share of federally collected revenue represents its allocation from the Federation Account and should not be confused with the total resources available across the country.

Under Nigeria’s existing revenue allocation formula, the Federal Government receives 52.68 per cent, state governments get 26.72 per cent, while local governments receive 20.60 per cent.

The Senate had on February 3 initiated moves to amend relevant provisions of the 1999 Constitution to review the existing revenue-sharing formula in favour of the Federal Government.

The proposed review is aimed at strengthening the centre’s financial capacity to meet its growing obligations, although it raises broader questions about fiscal federalism and the distribution of resources among the three tiers of government.

FG Plans to Transfer Some Responsibilities to States

Oyedele also disclosed that the Federal Government was considering transferring some responsibilities to state governments, arguing that subnational authorities are better positioned to handle certain services and development projects.

He said the proposed arrangement would allow the Federal Government to improve its revenue-generating capacity without imposing additional financial burdens on Nigerians.

According to the minister, the approach would involve providing targeted federal transfers to states to support priority sectors and encourage development initiatives with direct economic and social benefits.

Potential areas of intervention include basic education, agricultural development and the construction of access roads connecting farms to markets.

Oyedele said the arrangement could help states channel resources towards projects that stimulate economic activity, improve livelihoods and deliver tangible benefits to citizens.