Nigeria losing up to ₦20trn annually to revenue leakages  – Agbakoba

…..says debt servicing now gulps 70% of earnings

…..faults oil sector financing arrangements, refinery spending

By James Ogunnaike, Abeokuta

Former President of the Nigerian Bar Association (NBA),  Dr. Olisa Agbakoba SAN, has raised alarm over what he described as massive structural leakages in Nigeria’s public finance system, warning that the country could be losing as much as ₦20 trillion annually through weak fiscal governance, oil sector manipulations and institutional inefficiencies.

Agbakoba, who spoke during an interview on Frontline, a current affairs programme on Eagle 102.5 FM, said Nigeria’s persistent dependence on borrowing despite its enormous revenue potential reflects deep-rooted failures in public finance management and accountability.

According to him, the constitutional framework regulating Nigeria’s revenue system has been consistently undermined by agencies operating parallel financial structures outside the Federation Account.

Citing Section 162 of the 1999 Constitution, the senior lawyer explained that all revenues accruing to the federation are expected to be paid into a central Federation Account without deductions, lamenting that the constitutional provision has largely been ignored over the years.

“The Federation of Nigeria has a constitutional account into which all revenues are supposed to be paid without deductions, but the reality today is completely different,” Agbakoba said.

He accused the Nigerian National Petroleum Company Limited, (NNPCL), of playing a major role in the nation’s revenue crisis through multiple deduction practices and opaque financing arrangements that significantly reduce remittances into the Federation Account.

According to him, President Bola Tinubu’s decision to dissolve the former NNPCL board headed by Mele Kyari was a clear indication that government itself recognised the depth of systemic challenges in the oil sector.

He further noted that ongoing anti-corruption investigations involving officials of the oil company lend credence to concerns over financial leakages and weak accountability structures.

Agbakoba questioned why Nigeria continues to pile up debt despite possessing substantial revenue-generating capacity if resources were prudently managed.

He likened the country’s fiscal situation to that of a household borrowing money despite having enough funds sitting idle in its account.

“Nigeria should not be borrowing at the level it is borrowing today if our revenues are properly managed,” he stated.

The former NBA president warned that Nigeria’s debt profile has risen to disturbing levels, with debt servicing now consuming a significant portion of government earnings.

“If we earn 100 Naira, we first have to remove about 70 Naira to service debt obligations,” he said.

“That leaves very little for infrastructure, healthcare, education, salaries and other constitutional responsibilities of government.”

Agbakoba also faulted several crude oil-backed financing arrangements allegedly tied to future production commitments, warning that such deals mortgage the country’s future earnings.

He cited initiatives including Project Gazelle, Project Yield, Project Leopard and Eagle Export Funding as examples of financing arrangements where future crude production is exchanged for immediate cash injections.

According to him, such policies weaken Nigeria’s long-term fiscal stability and reduce future revenue inflows.

The senior advocate equally expressed concern over repeated government spending on refinery rehabilitation projects in Port Harcourt, Warri and Kaduna despite limited operational output from the facilities.

He described it as economically irrational for Nigeria to continue exporting crude oil while importing refined petroleum products.

“The refineries are still not functioning effectively despite huge investments. Without the Dangote Refinery, Nigeria would still be trapped in the endless cycle of fuel importation,” he said.

Agbakoba maintained that the country’s revenue challenges extend beyond crude oil earnings, stressing that petroleum profit tax, royalties, signature bonuses, gas penalties, company income tax, stamp duties and solid mineral revenues are all affected by systemic leakages.

According to him, Nigeria may currently be operating at nearly 60 per cent below its actual revenue potential due to structural inefficiencies and poor oversight mechanisms.

He also referenced concerns reportedly raised by the World Bank over Nigeria’s revenue administration system, noting that international assessments equally indicate substantial losses in public finance management.

The senior lawyer warned that declining revenues and poor fiscal discipline have pushed governments at all levels into unsustainable borrowing patterns.

On the economic reforms introduced by the Tinubu administration, Agbakoba described the removal of fuel subsidy and exchange rate liberalisation as necessary policy decisions, but faulted the absence of adequate cushioning measures to mitigate their impact on citizens.

He argued that proceeds from subsidy removal ought to have been channelled into a dedicated infrastructure development fund instead of being distributed to state governments without strict accountability measures.

Agbakoba also questioned the developmental impact of increased monthly allocations to states, noting that many sub-national governments now receive significantly higher revenues without visible improvements in infrastructure or public welfare.

“Virtually all office holders are more interested in 2027 than governance,” he said.

He insisted that issues of fiscal accountability and revenue leakages should dominate political discourse ahead of the next general elections.

According to him, Nigerians must begin to demand concrete policy directions from political leaders on how they intend to block leakages, improve revenue generation and reduce the nation’s dependence on borrowing.

Agbakoba stressed that without urgent reforms in revenue oversight, expenditure management and institutional accountability, Nigeria would remain trapped in a cycle of debt, inefficiency and underdevelopment despite its enormous economic potential.

He added that the country possesses enough resources to meet its constitutional obligations to citizens but lacks the fiscal discipline and governance structure needed to translate those resources into meaningful national development.

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