Stronger Tap, Leaking Pipes: Nigeria’s Fiscal Reforms and the Unfinished 70%
Nigeria has spent the last 18 months tightening the tap. The petrol subsidy is gone. Tax laws have been overhauled. Most consequential, the RMAFC Act 2025 gave the Revenue Mobilisation, Allocation and Fiscal Commission legal power to demand books, sanction revenue diversion, and sit at the FAAC table. For the first time, the fiscal referee has a whistle. That matters. Markets have responded. Sovereign risk perception has improved because the numbers going into the Federation Account are harder to hide. Agencies like NNPC, FIRS and Customs can no longer operate behind a weak mandate. Politically, the reforms signal will. Subsidy removal was costly. Tax reform hit entrenched interests. Passing the RMAFC Act meant confronting powerful bureaucracies. The government did it. More revenue is now entering the pot, and that is real progress.
But a tighter tap in a house with leaking pipes only increases the pressure. The central tension in Dr. Suleyman Ndanusa’s September 2026 analysis is this: Nigeria has modernized how it collects revenue, but it has not modernized how it allocates, spends, borrows and reports across the federation. Collection is at 30%. Integration is at zero. The gains are clear. Revenue assurance is stronger. RMAFC can now walk into revenue agencies and compel disclosure with the force of law. That closes one of the oldest loopholes: money disappearing before FAAC. The fiscal signal is also clearer. With subsidy gone and remittances more transparent, Nigeria looks more serious about discipline. Debt can be priced a little cheaper. Capital is a little less nervous. Within the system, the principle that someone must account for federation money has been restored.
The weakness begins the moment money leaves FAAC. RMAFC can follow revenue to the Federation Account, but it has no pathway to follow it into 36 state budgets and 774 local government accounts. Nigeria runs one economy and one account, but operates 37 different standards for budgeting, debt disclosure, and audited accounts. Some states publish on time and maintain debt offices. Others pass budgets months late and have not audited in years. This inconsistency is compounded by institutional design. Nigeria created two watchdogs and gave each half the job. RMAFC has constitutional spread across the federation but, until 2025, lacked enforcement teeth. The Fiscal Responsibility Commission has enforcement powers but its reach stops mostly at Abuja. One has the map. The other has the handcuffs. The result is regulatory arbitrage. A state can breach borrowing limits or hide guarantees, and no single body can intervene early. By the time the problem shows up as unpaid contractors or a request for federal support, the damage has already spread to banks and the national economy.
FAAC itself remains a structural conflict. The same people who receive allocations also verify the revenue. The Minister of Finance chairs the committee. Representatives of federal, state and local governments sit alongside the agencies that remit money. Technical questions get buried under the urgency to share. Membership of RMAFC on the committee helps, but it does not resolve the conflict. A beneficiary cannot credibly audit what it is also receiving. That is why FAAC figures often do not match later agency reports or audited accounts. There is also no consolidated view of what government owns and owes. Nigeria runs a monthly income statement and an annual cash budget, but has no annual public sector balance sheet. Debt statistics exclude state guarantees and arrears. Assets are off the books. Political remuneration is determined by RMAFC, yet the total cost including allowances is not published in a comparable format. Citizens know the size of the budget but not the cost of politics.
The implications of these gaps are direct. Stronger revenue without stronger accountability means bigger FAAC numbers will fund bigger opacity. Citizens will see allocations rise without seeing schools, hospitals, or roads improve. Trust erodes further. Fiscal risk does not respect boundaries. When a state accumulates contractor arrears or takes unsustainable loans, banks with exposure feel it. The Federal Government faces bailout pressure. National debt statistics and the naira absorb the stress. This creates “autonomy in good times, bailout in bad times.” A governor who practices discipline gets the same cheque as one who does not. Over time, prudence is punished and recklessness is subsidized. For investors, the ceiling is just as clear. They will applaud tax reform, but cannot get a consolidated picture of total liabilities. Without that, Nigeria will keep collecting more while paying more to borrow, because risk premiums are priced on partial data.
The path forward, as argued, is integration. Nigeria needs a national floor for fiscal transparency enforced by RMAFC. That floor would not dictate how states spend, but how they report. It would require timely budgets and audited accounts in a common format, quarterly disclosure of debt and guarantees, reporting of arrears, and annual fiscal risk statements. Compliance should be tied to incentives like market access and federal support, not commands. Verification must also leave the beneficiaries’ table. RMAFC, with its constitutional spread and new powers, should certify monthly revenue before FAAC allocates it. The committee should debate distribution, not the integrity of the number. Further, the split between RMAFC and FRC must be resolved. Consolidating federal fiscal responsibility functions inside RMAFC would place both visibility and enforcement in one constitutional body. States would retain autonomy over budgets but operate within minimum standards that protect the federation.
Finally, the fiscal picture must be completed. RMAFC should publish an annual schedule of political remuneration that is machine-readable and comparable. Working with the Accountant General and DMO, it should also produce an annual consolidated public sector balance sheet showing assets, liabilities and net worth across all tiers. That document would capture guarantees, arrears and public enterprises currently off the books.
The reforms of 2025 proved Nigeria can act when there is political will. The test now is whether Nigeria can finish. If the country establishes one rulebook, sovereign risk falls, borrowing costs drop, and the cycle of subnational crises and federal bailouts can be broken because problems are flagged early. If it does not, revenue growth will continue to be celebrated while fiscal risk migrates quietly into bank balance sheets and the next bailout. The question is no longer whether more money can be raised. It is whether the system that spends and accounts for it can be trusted.
