Agbakoba faults TSA, seeks overhaul of revenue framework

Legal practitioner and former Nigerian Bar Association President, Dr Olisa Agbakoba (SAN), has called for a comprehensive restructuring of Nigeria’s public finance system, arguing that the country’s revenue challenges are rooted in constitutional and institutional inconsistencies rather than actual scarcity of funds.

Presenting a policy paper in Lagos, Agbakoba said the confusion between the Federation Account and the Treasury Single Account has weakened fiscal transparency and enabled large-scale revenue leakages.

He hinged his argument on Section 162(1) of the 1999 Constitution, which requires that all federally collected revenues be paid into the Federation Account for distribution among the three tiers of government.

According to him, this constitutional provision has not been fully implemented, as the Treasury Single Account introduced by executive directive in 2015 has effectively taken over its role in practice.

“The Federation Account is a constitutional revenue-sharing pool for all tiers of government, while the TSA is a federal cash management tool. Conflating the two obscures accountability and undermines constitutional intent,” he said.

Agbakoba argued that while the TSA was designed to improve cash management and reduce inefficiencies, it lacked constitutional backing and could not replace the Federation Account.

The report claimed that Nigeria continues to suffer significant revenue losses as a result of this structural misalignment, estimating that as much as N20tn may be lost annually in revenues that should ordinarily accrue to the Federation Account.

It further stated that in 2025 alone, about 39 per cent of gross federation revenues estimated at N14.94tn were deducted at source before reaching the Federation Accounts Allocation Committee.

The paper also cited alleged discrepancies in remittances by key government agencies, including claims that the Nigerian National Petroleum Company Limited remitted N600bn out of N1.1tn due in 2024, retaining N500bn for what was described as legacy obligations.

It also referenced ongoing FAAC-related investigations into alleged under-remittances amounting to $42.37bn between 2011 and 2017.

Apart from revenue concerns, Agbakoba linked the current fiscal structure to Nigeria’s rising debt burden, noting that debt servicing consumed 78 per cent of federal revenue in 2023 and 69 per cent in 2024, levels he said are far above international sustainability benchmarks.

To address the challenges, he proposed a constitutional amendment requiring that all revenues be remitted into the Federation Account on a gross basis without deductions.

He also recommended that all revenue collection costs be subjected to appropriation by the National Assembly.

The legal expert further called for the abolition of the TSA in its current form, describing it as “constitutionally incompatible” with Section 162, and advocated the creation of a new Federation Account Administration Act to strengthen governance and accountability.

He also identified what he described as a long-standing constitutional gap, the absence of a clearly-designated custodian for the Federation Account.

Agbakoba urged that the issue become a major policy debate ahead of the 2027 general elections, calling on presidential aspirants to clearly state their positions on reforming the country’s revenue framework.

“In her time as Finance Minister, Dr Ngozi Okonjo-Iweala introduced the Treasury Single Account as a reform to consolidate government revenues. It was well-intentioned, but it is not Section 162. It was created by executive directive and lacks constitutional force. Leakages have continued,” he said.

He maintained that full implementation of Section 162, backed by constitutional amendment, remains the most viable solution to Nigeria’s fiscal challenges.