Fiscal Shockwave: Tinubu Reclaiming Every Kobo for Nigerians
In a bold and transformative fiscal pivot, President Bola Ahmed Tinubu has triggered what many are calling a “fiscal bombshell”, a sweeping reform that bars key federal revenue-generating agencies from retaining a share of the funds they collect.
From now on, every kobo generated by the Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) must be remitted in full to the Federation Account.
This reform, announced by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, effectively abolishes the long-standing but controversial practice of “cost of collection” deductions.
These deductions had allowed revenue agencies to pocket a percentage of their collections often without sufficient oversight before remitting the balance to the federal purse.
In 2024 alone, the FIRS reportedly withheld over N250 billion as cost of collection. This figure, when aggregated with similar deductions from NCS and NUPRC, translates to hundreds of billions of naira annually money that, under the 1999 Constitution (as amended), should have been channelled directly to the Federation Account for distribution through the Federation Account Allocation Committee (FAAC) to all tiers of government.
For decades, this deduction practice operated in a grey zone technically legal under enabling Acts but fundamentally at odds with the principle of fiscal equity and transparency enshrined in the Constitution. Critics have long argued that it created institutional incentives for opacity, bloated operational budgets, and weakened fiscal coordination.
Now, with Tinubu’s directive, this leakage has been decisively plugged. “This is about fairness, transparency, and accountability. Nigerians deserve to feel the impact of every naira collected,” said Minister Edun, summarising the ethos behind the reform.
From a constitutional standpoint, Tinubu’s move restores the sanctity of Section 162 of the 1999 Constitution, which clearly states that “all revenues collected by the Government of the Federation shall be paid into the Federation Account.” By enforcing this provision, the administration is not only reclaiming lost public funds but also reasserting the rule of law in fiscal governance.
This shift is particularly significant in a federal system where the financial health of subnational entities states and local governments) is tied directly to FAAC allocations.
Increased remittances to the Federation Account mean greater resources for infrastructure, public services, and local development across Nigeria’s 774 local governments.
More than a mere policy tweak, this reform signals a fundamental realignment of public finance from an agency-centric model that prioritised bureaucratic autonomy to a people-centric model focused on service delivery.
It aligns tightly with President Tinubu’s Renewed Hope Agenda, which places economic recovery, social investment, and institutional reforms at the heart of national transformation.
Critically, the funds recovered from this reform will bolster the government’s ambitious social protection programs. In October 2025 alone, the administration is rolling out direct cash transfers to 10 million vulnerable households, with a goal to reach 50 million households by year’s end.
These interventions are designed not just as palliatives, but as structural tools for poverty alleviation, household resilience, and economic inclusion.
From a macroeconomic perspective, the directive could not be timelier. Nigeria continues to grapple with revenue shortfalls, high debt service obligations, and foreign exchange volatility.
By consolidating revenues and improving remittance compliance, the government strengthens its fiscal buffers, enhances budget credibility, and builds the confidence of both domestic and international investors.
Moreover, full remittance improves transparency and auditability, making it easier to track public funds and reduce the risk of corruption and mismanagement. Institutions like the Office of the Accountant-General and the Auditor-General for the Federation are now better positioned to enforce real-time financial oversight.
Still, the reform is not without its challenges. Revenue agencies particularly FIRS and Customs have long defended their deductions as necessary to maintain operational independence, invest in technology, and reward staff performance.
With the scrapping of cost of collection, these agencies will now require explicit budgetary allocations from the National Assembly, which may introduce delays and bureaucratic bottlenecks.
Additionally, ensuring compliance will demand robust financial reporting systems, new performance metrics, and a commitment to transparency from the Executive.
The government must move swiftly to design a sustainable funding model for these agencies that maintains their efficiency without compromising accountability.
In sum, Tinubu’s directive is more than a technocratic adjustment it is a symbolic and substantive break from the past.
By insisting that every kobo must be accounted for and redirected to the people, the administration is sending a clear message: government must work for all Nigerians, not just its institutions.
Whether this marks the beginning of a broader culture shift in Nigeria’s fiscal ecosystem will depend on execution. But for now, it stands as a bold reminder that fiscal reforms, when rightly conceived and courageously executed, can rewire the economy for growth, equity, and resilience.
The bottom line is that every billions once hidden in bureaucratic silos are now flowing back into the bloodstream of the nation. Nigerians, quite literally, will feel the impact of every kobo. US Shutdown Masks Far Deeper Threat, CEO Says
