Senior Advocate of Nigeria and former President of the Nigerian Bar Association, Dr. Olisa Agbakoba, has raised a major fiscal alarm over what he described as deep structural leakages within Nigeria’s public finance system, warning that the country may be losing as much as ₦20 trillion annually through institutional inefficiencies, oil sector manipulations, and weak enforcement of constitutional revenue rules.
Speaking on Monday during an exclusive interview while analyzing socio-economic and political issues on Frontline, a current affairs Programme on Eagle 102.5 FM, Ilese Ijebu, Ogun State, Agbakoba, argued that Nigeria’s recurring dependence on borrowing despite having significant revenue streams reflects deep structural failures in public finance management.
Constitutional Framework and Federation Account Disputes
Agbakoba explained that the constitutional framework clearly establishes a Federation Account into which all government revenues are expected to be paid without deduction. According to him, the intent of the law is unambiguous, but its implementation has been weakened by agencies that have developed parallel financial practices.
He said, “The Nigerian Federation has an account itself. It’s in Section 162 of the constitution and it says all monies, everything, all our monies coming from all kinds of sources shall be pinned into this account without any deduction. But the problem is how far is this account really receiving money? Well the problem is that it is not and the two big culprits in this process are the NNPC they are terrible culprits which is what led to President Tinubu sacking the entire NNPC board of Mele Kiyari and co and the EFCC is even at this time charging one particular.” He argued that despite this clarity, compliance has been inconsistent, creating room for financial leakages across key revenue-generating institutions.
Fiscal Alarm Over Rising Borrowing and Weak Revenue Systems
He further stated that Nigeria’s fiscal contradiction lies in the fact that the country continues to borrow heavily despite having sufficient revenue sources if properly managed. He compared the situation to a household with funds in its account still resorting to borrowing. Agbakoba said, “We are borrowing a lot of money, as you know. We own now about 160 trillion Naira, and we are continuing to borrow. So, the question is whether this is the right way to go in spite of us having revenue to meet our needs. So, it’s like me, you know, I’m the president of my household and I have enough resources in my bank account to meet the needs of my family, but I’m borrowing, and the question would be why am I doing that?”. He maintained that this borrowing pattern reflects not revenue scarcity but structural failure in revenue consolidation and management.
NNPC Operations and Alleged Oil Revenue Leakages
A major focus of his criticism was the Nigerian National Petroleum Company Limited (NNPC), which he described as central to the leakage problem in the oil and gas sector. He alleged that multiple deduction practices and financial engineering arrangements have significantly reduced inflows into the Federation Account.
He said, “I’m sure you have an account. I have an account. I have an office account called Olisa Agbakoba legal account with First Bank, for instance. The Nigerian Federation has an account itself. It’s in section 162 of the constitution and it says all monies, everything, all our monies coming from all kinds of sources shall be pinned into this account without any deduction. But the problem is how far is this account really receiving money? Well, the problem is that it is not and the two big culprits in this process are the NNPC, they are terrible culprits, which is what led to President Tinubu sacking the entire NNPC board of Mele Kiyari and co and the EFCC is even at this time charging one particular director of the NNPC, they found 80 billion in his account. So it’s part of the ongoing charge. So these traditional accounts is our problem because it just says the Federation of Nigeria shall maintain a special account called the Federation account into which shall be paid all revenues collected by the federal government.”
Agbakoba also pointed to executive recognition of the problem, noting that reforms under President Bola Tinubu reflect awareness of systemic leakages. He referenced Executive Order 9 as evidence that the presidency acknowledged the scale of revenue loss within government institutions. “It’s quite huge and that’s why even the president himself passed executive order 9, which prohibited NNPC and its various agencies from continuously deducting as much as 100 billion Naira. So that is the president himself endorsing what I’m doing, so not just that I have a fanciful idea of the Nigerian problem of leakages but let me just give you a bit of a conceptual background so it will be easier to follow the discussion”, He argued that while reforms have been introduced, implementation gaps continue to undermine their effectiveness, particularly in the oil sector where complex financing arrangements persist.
Agbakoba also raised concerns about unconventional oil financing arrangements, including what he described as “forward crude sales,” where future crude production is allegedly sold in advance to raise immediate cash. He referenced initiatives such as Project Gazelle, Project Yield, and Project Leopard, which he claimed were structured around future crude oil revenue commitments. According to him, such arrangements weaken Nigeria’s long-term fiscal stability by mortgaging future earnings for short-term liquidity.
“So what they’ve done is assuming we produce 1.6 barrels of crude every day, they’ve told a couple of people around the world, please give us money for crude that we will produce in six months. And there are four projects. Project Gazelle, Project Yield, Project Leopard, Eagle Export Funding. They’ve used money from our crude to bargain for huge amounts of money.”
Agbakoba also questioned repeated spending on refinery rehabilitation projects across Port Harcourt, Warri, and Kaduna, noting that despite significant financial commitments, output remains limited. He argued that Nigeria continues to export crude oil while importing refined petroleum products, describing the arrangement as economically irrational. He said the structure of the sector reflects deeper governance inefficiencies rather than technical capacity limitations.
“The one that is so laughable is that they sold some of the crude to fix and rehabilitate our refineries. Port Harcourt, Kaduna, Warri. But they’re not working. So the question is, where’s the money? They’re not working. So these are the leakages that we are very concerned about. If not for Dangote whose refinery is running, we would still be in this stampede of keeping to import oil when we have the crude. So we export crude to import petroleum and refined petroleum. What sense does it make?”
He expanded his argument to include broader revenue streams, stating that petroleum profit tax, royalties, licensing fees, gas penalties, and other statutory inflows are all affected by systemic leakages. According to him, the cumulative effect is that Nigeria receives significantly less than what its economy generates. He estimated that the country may be operating at up to 60 percent below its actual revenue potential due to structural weaknesses in fiscal management.
“I can’t start naming all of them. Petroleum profit tax, oil and gas revenues, gas penalties, signature bonuses and licensing fees, company income tax, so many things. Stamp duties, solid minerals, including tax, so many. I can’t start naming all of them. They are leaking. So what we should be having in our federation accounts is something like about 60% less than what it should be. That forces us to go abroad and therefore the fiscal policy simply means how you manage your financial arrangements. Our fiscal policy is an absolute catastrophe.”
Agbakoba also referenced international assessments, including World Bank estimates, which he said align with concerns about revenue inefficiency in Nigeria. He maintained that these gaps force the country into continuous borrowing, which has now reached unsustainable levels. He warned that debt servicing has become a major constraint on national development spending, limiting investment in infrastructure and social services.
“Even the World Bank mentioned it in their current estimates that the leakage is about 10 trillion. I estimate it to be about 20. The fact itself, that is the state. Fact is where the state, the federal government and the local governments come every month to share money. They are complaining. They’ve also launched an investigation that NNPC is not paying into the federation accounts what it ought to be paying. And therefore, the sharing formula is being lost because of this huge leakage.”
He explained that fiscal mismanagement, rather than lack of resources, is the core issue driving Nigeria’s economic instability. He said, “If we earn 100 Naira, we first have to bring out 70 Naira to pay interest on the debt.” According to him, this leaves only a small portion of revenue available for governance responsibilities such as salaries, capital projects, and recurrent expenditure.
Agbakoba also criticized the political environment, arguing that governance has been overshadowed by electoral calculations. He said, “Virtually all office holders are more interested in 2027 than governance.” He maintained that this focus weakens institutional accountability and allows fiscal leakages to persist without urgent corrective action.
He argued that subsidy removal and exchange rate reforms were structurally necessary but poorly managed in terms of mitigation. He questioned why savings from subsidy removal were not channelled into a structured infrastructure fund dedicated to national development projects. Instead, he said, the funds are largely distributed to state governments without strict accountability frameworks, reducing their developmental impact.
“President Tinubu’s removal of fuel subsidy and the regulation of the exchange rate has caused a lot of challenges. I generally believe that those two policies were correct. What hasn’t happened is the necessary mitigating factors. Okay, why would the federal governments, now that they have more money from removal of fuel subsidies, not create a special account where this money is put? And you call it infrastructure funds. So you need to build bridges, schools, all kinds of things. You know what they’re doing with the money? They’re simply giving to the governors. Now tell me how many governors are really using the money that they are getting now. Before they were getting maybe 30 percent. Right now some governors are getting up to 100 billion a month. So it’s going nowhere. So you can see the roundabout nonsense. So I think that this issue ought to be given prominent attention.”
Institutional Overlap and Fiscal Governance Weakness
Agbakoba warned that many state-level governments are receiving significantly higher monthly allocations but without corresponding improvements in public services. He described the situation as a continuation of inefficient fiscal redistribution that does not translate into measurable development outcomes. He insisted that such practices contribute to worsening public poverty despite increased nominal revenue inflows.
“I think that issue is perhaps the single most important governance matter that should concern all political parties. You can see all the political parties running up and down, doing conventions, changing parties, hopping from today one is the ADC to tomorrow is the AP. You don’t even know. I’m tired. I don’t even bother to follow that anymore. But I’m not hearing any politician say to us who will vote for them. We are going to be concerned about the leakage of our revenue. Because we can see the poverty. President Tinubu’s removal of fuel subsidy and the regulation of the exchange rate has caused a lot of challenges. I generally believe that those two policies were correct. What hasn’t happened is the necessary mitigating factors.”
He concluded that Nigeria must urgently restructure its fiscal architecture to prevent continued economic decline.
“I think this issue ought to be given prominent attention. Nigerians should know and demand from anyone who wants to be president next year, how will you bridge this leakage? It’s too much. So I think that this issue should be on the ballot for 2027. It should be about the 2027 election. Absolutely, absolutely. And it’s going to be issue-based. The first starting point will be money because people are poor. You know, governments say they can’t do the things that the constitution says they ought to do to make us happy. That’s what the constitution says. Welfare, happiness, security. Government cannot do that. But government has the resources to do exactly what it claims it cannot do.”
According to him, without deep institutional reforms in revenue collection, oversight, and expenditure management, the country will remain trapped in cycles of borrowing, inefficiency, and underdevelopment despite rising earnings.
