Oyedele: States Must Stop Depending Solely on Federal Allocations

The Minister of Finance and Coordinating Minister of the Economy, Prof. Taiwo Oyedele, has urged Nigerian states to reduce their dependence on federal allocations and build productive economies capable of generating sustainable revenue.

Speaking at the 2026 National Council on Finance and Economic Development (NACOFED) conference in Owerri, Imo State, Oyedele said allocations from the Federation Account alone could not guarantee prosperity for states.

He called for stronger fiscal federalism, increased revenue generation and economic diversification, saying these were necessary to make states more resilient to economic shocks.

“Nigeria must move from an allocation-dependent economy to one driven by production, investment and job creation,” he stated.

Oyedele said the removal of fuel subsidy and liberalisation of the foreign exchange market had substantially increased the resources available for distribution through the Federation Account.

He noted that monthly Federation Account allocations, which ranged between N300 billion and N600 billion before 2023, now exceed N2 trillion.

The minister disclosed that the reforms produced estimated savings of N15.8 trillion between June 2023 and December 2025. However, he rejected the perception that the reforms left the Federal Government with a massive cash surplus.

Of the N15.8 trillion, the Federal Government received N5.43 trillion, states received N6.52 trillion and local governments received N3.88 trillion.

He said the Federal Government recorded about N20.4 trillion in additional resources during the period from subsidy savings, increased revenues and borrowing, but its additional expenditure reached N30.64 trillion.

“The figures tell a financing story, not simply a savings story,” he said.

According to Oyedele, the N15.8 trillion in subsidy savings was distributed among the three tiers of government and other statutory beneficiaries rather than being retained by the Federal Government.

He said the Federal Government’s additional resources comprised the N15.8 trillion subsidy savings, N3.12 trillion in incremental revenues and N11.85 trillion in incremental borrowing.

At the same time, the government spent heavily on wages, debt servicing, infrastructure, electricity subsidies and other obligations.

“Subsidy removal, therefore, did not create one large pool of cash available to the federal government. It simply reduced a major fiscal burden and the amount of borrowing that would otherwise have been required.”

FG’s wage bill surpasses subsidy savings

Oyedele revealed that the Federal Government spent N9.39 trillion on wages during the period, with the expenditure driven by the new national minimum wage, wage awards, allowances and other personnel costs.

External debt servicing accounted for another N9.37 trillion, largely due to the higher naira cost of servicing foreign currency obligations following exchange rate depreciation.

He added that N6.47 trillion went into strategic infrastructure projects in transport, housing, agriculture and security, while N3.14 trillion was spent on electricity subsidies.

Explaining why the Federal Government continues to borrow despite the reforms, Oyedele said government revenue remained insufficient to cover expenditure.

“Subsidy removal resulted in less borrowing than would otherwise have been required, rather than eliminating the need to borrow.”

Reforms funding welfare and infrastructure

The minister said resources generated through the reforms had been used to support salary increases, regular payment of salaries and pensions, settlement of pension arrears and gratuities, expansion of NELFUND and affordable credit programmes for consumers and small and medium-sized businesses.

He identified several major infrastructure projects funded during the period, including the Lagos-Calabar Coastal Highway, which received N2.23 trillion; the Sokoto-Badagry Super Highway, N1.11 trillion; the Trans-Sahara Super Highway, N489.2 billion; and the Road Emergency Intervention Project, N366 billion.

DMO defends Abu Dhabi loan

Meanwhile, the Director-General of the Debt Management Office, Ms. Patience Oniha, said the Federal Government’s loan arrangement with First Abu Dhabi Bank was aimed at diversifying Nigeria’s funding sources and obtaining financing on more favourable terms.

Oniha said the transaction followed due process, secured National Assembly approval and complied with the Fiscal Responsibility Act.

Also speaking at the conference, Imo State Governor, Senator Hope Uzodimma, said his administration was investing in agriculture, the digital economy, power and infrastructure to diversify the state’s economy.

Represented by his deputy, Dr Chinyere Ekomaru, the governor said states needed to be deliberate and intentional about diversifying their economies.

Atiku asks Tinubu to account for N30 trillion

Meanwhile, ADC presidential candidate Atiku Abubakar has demanded greater transparency over approximately N30 trillion in Federation revenues, deductions, savings and transfers.

Atiku, through his Senior Special Assistant on Public Communication, Phrank Shaibu, said the latest July 2026 Federation Account figures had raised further questions about the management of the country’s revenues.

He particularly demanded an explanation of the financial gains from the removal of petroleum and energy subsidies.

“President Tinubu did not ask Nigerians to endure the agony of subsidy removal so that the proceeds could become unexplained stashed funds beyond public scrutiny. The savings and additional revenues generated by these reforms belong to the Nigerian people.

“They are not the private reserves of the Presidency or any government agency. Where is the subsidy-removal windfall?” he queried.

Atiku argued that the resources should have been channelled into projects capable of directly improving Nigerians’ welfare and productive capacity.

He said his previous reconciliation of published Federation Account figures identified approximately N28 trillion requiring explanation up to June 2026. According to him, the July figures have raised additional concerns, bringing the cumulative amount requiring proper public accounting towards N30 trillion.

“The question President Tinubu must answer remains painfully simple: Where is the money?” Atiku said.

He said gross statutory revenue for July 2026 stood at N4.359 trillion, while the Federation Account Allocation Committee approved N3.007 trillion for distribution to the Federal Government, the 36 states and 774 local government councils.

Atiku maintained that the July figures reinforced the need for a comprehensive reconciliation of revenues accruing to the Federation Account and the deductions made before distribution.

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