*Wants urgent reduction to global standards of 0.5% to 1%
By Abiodun Folarin
WorldStage– Economist and Professor of Capital Market, Prof. Uche Uwaleke has Expressed concerns over Nigeria’s fiscal leakages, warning that the 4% to 7% cost of revenue collection by key agencies is eroding national earnings and must be urgently reduced to global standards of 0.5% to 1%.
The experts specifically pointed to deductions by the Nigerian Upstream Petroleum Regulatory Commission (4%), Nigerian Revenue Service (4%), and the Nigeria Customs Service (7%), describing the current structure as “excessive and inefficient.”
Speaking on the Arise TV Morning Show on Thursday, Financial Economist and Professor of Capital Market, Prof. Uche Uwaleke, said the existing model where agencies are funded through a percentage of collections creates a perverse incentive that prioritises volume over efficiency, contrary to global best practices.
The analysts called for an immediate transition to a budget-based funding system, alongside stricter oversight, to curb leakages and improve transparency in revenue management.
Uwaleke insisted that aligning collection costs with global benchmarks could unlock billions of naira for critical sectors and strengthen the country’s fiscal position.
The position aligns with broader concerns raised by the World Bank on weak coordination, high recurrent spending, and inefficiencies within Nigeria’s public finance framework.
He said: “What we have is essentially a revenue management problem capturing all that should come in. There are significant leakages along the process, which the World Bank report highlighted.”
He added: “If you look at the UK, for example, Her Majesty’s Revenue and Customs has a cost-to-revenue ratio of about 0.51%. Across OECD countries about 38 of them it ranges between 0.5% and 1%. Even in Africa, Kenya records between 1% and 2%, while countries like Ghana, South Africa, and Uganda operate largely budget-based systems rather than percentage-based collections.”
“So, my point is that the 4% to 7% range is very high and not in line with global standards. We are simply incentivising inefficiency,” he said.
Uwaleke further explained that there are multiple inflows into the Federation Account, including revenues collected by the Nigerian Revenue Service (NRS), (formerly the Federal Inland Revenue Service), the Nigerian National Petroleum Company Limited (NNPCL), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Nigeria Customs Service.
He noted that leakages associated with the NNPCL appear to have been partially addressed through Executive Order 9, which sought to curb deductions linked to provisions in the Petroleum Industry Act (2021), including frontier exploration funding, management fees, and other retention mechanisms.
“That was a step in the right direction,” he said, adding that more reforms are needed, particularly in addressing leakages within other revenue-generating agencies.
He stressed that despite rising revenues, the high cost of collection leaves limited funds available for critical sectors.
“We appear to be collecting more revenue, but we have very little left to spend in areas that need these funds most,” he said.
Citing data from January 2024, Uwaleke noted that the NRS, NUPRC, and the Nigeria Customs Service collectively received about ₦78 billion as first-line charges an amount higher than allocations to entire geopolitical zones.
According to him, the six Northeast states received about ₦56 billion during the same period, while the North Central and Southeast zones received ₦55 billion and ₦47 billion respectively.
“This shows that these agencies receive more on a monthly basis than what many states combined get. When you compare this with allocations to education and health critical sectors you realise the opportunity cost is extremely high,” he said.
He therefore advocated for integrating these agencies fully into the budgetary process.
Uwaleke also called for a review of the Treasury Single Account (TSA) to close emerging loopholes.
He said: “The TSA was introduced to enhance transparency, but over time, we have not seen consistent review or monitoring of the framework. When systems are not reviewed, people find ways to circumvent them.
“Ordinarily, the TSA should strengthen accountability and transparency. What we need now is a comprehensive review to ensure it continues to serve its original purpose.”
