As the Federal Government improves on its revenue generation across various sectors, the cost of revenue collection by relevant agencies has shot up by 44.8 per cent to N1.05 trillion.

The agencies include Federal Inland Revenue Service (FIRS), the Nigeria Customs Service (NCS) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

The increase is N726.29 billion more than what the three agencies received as cost of collection in the corresponding period of nine months in 2024.

An analysis of the communiqués released by Federation Account Allocation Committee (FAAC) at the end of all the meetings it has so far held this year, indicates that revenue collection cost for the three agencies stood at N107.79 billion in January 2025, N89.09 billion in February, N85.38 billion in March, N101.05 billion in April, N111.91 billion in May, N162.79 billion in June, N152.68 billion in July; N124.84 billion in August and N116.15 billion in September.

Under the current cost of collection arrangement, the FIRS receives four per cent of non-oil revenues; the NCS receives seven per cent of customs duties and levies, while the NUPRC gets four per cent of royalties, rents, and other oil and gas sector revenues.

Thus, the statement released last Friday by the Director, Information and Public Relations at the Federal Ministry of Finance, Mohammed Manga, on the outcome of the FAAC meeting for October 2025, partly read:

“The Federation Account Allocation Committee (FAAC), at its October 2025 meeting chaired by the Accountant General of the Federation, Shamsudeen B. Ogunjimi shared a total sum of N2.103 trillion to the three tiers of government as Federation Allocation for the month of September 2025 from a gross total of N3.054 trillion.

“From the stated amount inclusive of Gross Statutory Revenue, Value Added Tax (VAT) and Electronic Money Transfer Levy (EMTL), the Federal Government received N711.314 billion, the States received N727.170 billion, the Local Government Councils got N529.954 billion, while the Oil Producing States received N134.956 billion as Derivation, (13% of Mineral Revenue). “The sum of N116.149 billion was given for the cost of collection, while N835.005 billion was allocated for Transfers Intervention and Refunds.”

Further analysis of data published by the FAAC shows that revenue collection cost received by the three agencies has maintained an upward trend in recent years. Indeed, in its Nigeria Development Update (NDU), released on October 8, the World Bank raised concerns over Nigeria’s rising cost of revenue collection, which it warned, threatens the country’s fiscal efficiency despite recent gains in non-oil revenue mobilisation and digital tax reforms.

According to the report, Nigeria’s revenue collection expenses have grown faster than actual revenues in the past three years, widening the gap between what the government earns and what it retains for development spending.

The report noted that while Nigeria’s total federally collected revenue is maintaining an upward trend, aided by higher oil receipts, improved tax compliance, and inflation adjusted nominal gains, the country’s cost of revenue collection has more than doubled in just two years, underscoring how administrative expenses continue to climb despite automation and digital reporting upgrades.

Specifically, the report noted that while in 2022 Nigeria’s revenue collection expenses stood at N373.45 billion — about 2.1% of total revenue, it increased by 26.4% to N472.13 billion in 2023 even as revenue grew by a smaller margin.