Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has urged state governments to reduce their dependence on federal allocations and develop sustainable sources of revenue to drive economic growth and long-term prosperity.
Oyedele spoke at the 2026 National Council on Finance and Economic Development (NACOFED) conference in Owerri, Imo State, where he called for stronger fiscal federalism, improved internally generated revenue and economic diversification.
He said federal allocations alone could not guarantee prosperity for states, stressing that Nigeria must move from an allocation-dependent economy to one driven by production, investment and job creation.
“Nigeria must move from an allocation-dependent economy to one driven by production, investment and job creation,” he said.
Oyedele also explained that Nigeria recorded estimated savings of ₦15.8 trillion from the removal of the fuel subsidy and liberalisation of the foreign exchange market between June 2023 and December 2025.
However, he said the reforms did not leave the Federal Government with a huge pool of cash, as is widely believed.
According to him, the reforms significantly increased the revenue available for distribution through the Federation Account. Monthly Federation Account allocations, he said, which stood between ₦300 billion and ₦600 billion before 2023, are now above ₦2 trillion.
Of the ₦15.8 trillion generated through the reforms, Oyedele said the Federal Government received ₦5.43 trillion, states received ₦6.52 trillion, while local governments received ₦3.88 trillion.
FG’s ₦20.4trn Resources, ₦30.64trn Spending
Oyedele said the Federal Government generated about ₦20.4 trillion in incremental resources during the period from subsidy savings, additional revenue and borrowing.
The figure comprised ₦5.43 trillion from subsidy savings, ₦3.12 trillion in additional revenues and ₦11.85 trillion in incremental borrowing.
However, he said additional expenditure during the same period reached approximately ₦30.64 trillion.
“The figures tell a financing story, not simply a savings story,” Oyedele said.
He explained that the subsidy savings mainly reduced fiscal pressure and lowered the amount the government would otherwise have needed to borrow.
“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.”
Wages, Debt and Infrastructure
The minister disclosed that the Federal Government spent ₦9.39 trillion on wages during the period, driven largely by the new minimum wage, wage awards, allowances and other personnel costs.
Another ₦9.37 trillion went towards external debt servicing, while ₦6.47 trillion was invested in strategic infrastructure covering transport, housing, agriculture and security.
The government also spent ₦3.14 trillion on electricity subsidies to cushion consumers from the impact of higher electricity tariffs.
Oyedele said the Federal Government continues to borrow because its revenue remains insufficient to meet its expenditure obligations.
“Subsidy removal resulted in less borrowing than would otherwise have been required, rather than eliminating the need to borrow,” he said.
How Reform Resources Were Used
According to Oyedele, resources generated through the reforms have supported salary increases, prompt payment of salaries and pensions, settlement of pension arrears and gratuities, expansion of the Nigerian Education Loan Fund (NELFUND) and affordable credit schemes for consumers and small and medium-sized enterprises.
He also listed major infrastructure projects funded during the period, including the Lagos-Calabar Coastal Highway (₦2.23 trillion), Sokoto-Badagry Super Highway (₦1.11 trillion), Trans-Sahara Super Highway (₦489.2 billion) and the Road Emergency Intervention Project (₦366 billion).
FG Defends Abu Dhabi Loan
The Director-General of the Debt Management Office (DMO), Patience Oniha, said the Federal Government’s loan arrangement with First Abu Dhabi Bank was aimed at diversifying Nigeria’s funding sources and securing financing on favourable terms.
She said the transaction followed due process, having received National Assembly approval and complied with the relevant provisions of the Fiscal Responsibility Act.
Uzodimma: States Must Diversify
Imo State Governor Hope Uzodimma said his administration was investing in agriculture, the digital economy, power and infrastructure as part of efforts to diversify the state’s economy.
Represented by his deputy, Chinyere Ekomaru, the governor said states must be deliberate and intentional about developing alternative economic sectors and reducing dependence on allocations.
Atiku Demands Account of ₦30trn
Meanwhile, ADC presidential candidate Atiku Abubakar has challenged President Bola Tinubu to account for approximately ₦30 trillion in Federation revenues, deductions, savings and transfers that he said require transparent reconciliation.
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 public revenue.
He particularly demanded an explanation of the fiscal gains from the removal of petroleum and energy subsidies, arguing that Nigerians were promised that the difficult reforms would free resources for development.
“Where is the subsidy-removal windfall?” Atiku queried.
He said such resources should be visibly invested in projects that improve Nigerians’ living conditions and strengthen the country’s productive capacity.
Atiku said his earlier reconciliation of published Federation Account figures had identified approximately ₦28 trillion requiring explanation up to June 2026, but the July figures had pushed the amount requiring proper public accounting towards ₦30 trillion.
“The question President Tinubu must answer remains painfully simple: Where is the money?” Atiku said.
For July 2026, Atiku said gross statutory revenue stood at ₦4.359 trillion, while the Federation Account Allocation Committee approved ₦3.007 trillion for distribution to the Federal Government, 36 states and 774 local government councils.
He argued that the figures reinforced the need for a comprehensive reconciliation of revenues flowing into the Federation Account and the deductions made before distribution.
