Fiscal Policy Reform: Agbakoba calls for constitution amendment of section 162(1)

.Says Nigeria loses over N20trn annually to leakages

By Olasunkanmi Akoni

Human rights activist and former President of the Nigerian Bar Association, NBA, Olisa Agbakoba, has stressed the need for fiscal policy reform with the amendment of Nigeria Constitution, specifically, section 162 (1), to address years of fiscal leakages and unnecessary borrowing by the Federal Government.

Agbakoba made the call on Wednesday at a media briefing titled: The Federation Account of Nigeria and Infinite Possibilities. When the framework is put right,” held at his Apapa office.

In a paper focusing on fiscal policy reform, he explained that the objective of the amendment is to make sure that section 162, subsection 1 of the Constitution of Nigeria works.

According to Agbakoba, Section 162(1) of the constitution provides that, ” The Federation shall maintain a special account to be called the Federation Account into which shall be paid all revenues collected by the government of the federation…This is the law. But it is not being followed.”

Making reference to former Minister of Finance, Dr. Ngozi Okonjo-Iweala, for creating the Treasury Single Account, TSA, to consolidate government revenues, she described it as a well-intentioned reform.

“TSA is not section 162. It was introduced by the executive directive, not by law, and it does not have the constitutional force that section 162 carries. Leakages have continued.

“By current estimates, Nigeria is losing up to N20 trillion naira every year in revenues that should be entering the Federation Account but never arrive.

“The solution is to fully implement section 162 by amending the Constitution to make it’s obligations clear, binding, and enforceable.”

Making reference to reports, Agbakoba, while listing key findings on Nigeria’s revenues, includes: Federation revenues rising from ₦16.8 trillion in 2023 to ₦31.9 trillion in 2024 and continue growing.

In 2025, over 39 per cent of gross federation revenues (₦14.94 trillion) were absorbed by deductions before reaching the Federation Account Allocation Committee, FAAC.

Nigerian National Petroleum Company Limited, NNPCL, remitted only ₦600 billion of ₦1.1 trillion due in 2024, withholding ₦500 billion reportedly for legacy arrears.

“An ongoing FAAC investigation covers allegations of $42.37 billion in under-remittances between 2011 and 2017.

“Debt service consumed 78 per cent of federal revenue in 2023 and 69 per cent in 2024, far above the 30- 40 per cent IMF/World Bank benchmark. I

“Nigeria’s infrastructure deficit is estimated at $2.3 trillion between 2020 and 2024.

“The constitution does not specify a custodian for the Federation Account, a critical gap unaddressed for 25 years.

“The TSA is constitutionally invalid and structurally incompatible with the Federation Account and should be abolished and replaced by the Federation Account Administration Act architecture proposed in this paper.

Agbakoba proposed a four-prong approach as solution: “First, the Federation Account suffers from a constitutional gap: it is established but inadequately operationalised.

“Second, the revenue remittance architecture is broken, with multiple agencies operating as collection points without uniform accountability.

“Third, the TSA introduced by executive directive without legislative or constitutional authority unconstitutionally usurps the Federation Account and must be abolished.

“Fourth, the President has both the authority and the obligation to remedy all of this through a comprehensive Executive Order, supported by dedicated legislation and, in due course, a constitutional amendment.”

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