World Bank Report: Nigeria's FIRS Allocates 4% Oil Revenue, Surpassing Peers - Fiscal Challenges Ahead

The World Bank's October 2025 Nigeria Development Update revealed that the Federal Inland Revenue Service (FIRS) allocates 4% of oil revenue (excluding royalties), surpassing countries like South Africa and Ghana. This allocation model has led to a significant increase in statutory deductions, impacting revenue distribution among federal, state, and local governments through the Federation Account Allocation Committee (FAAC).

The report highlighted concerns about Nigeria's high cost of revenue collection, leading to fiscal inefficiencies and challenges in equitable resource sharing. The total statutory deductions surged to a trillion in 2024, nearly double the amount recorded in 2023, indicating a growing financial burden on the government.