Nigeria’s revenue boom deepens poverty, exposes governance failure
Nigeria has never been richer on paper. In the first eight months of 2025, the federal government raked in ₦20.6 trillion in revenue, almost matching the total collection for all of 2024 and setting a record pace. Oil receipts surged, exchange rate gains swelled coffers, and the government has never had more fiscal firepower. Yet, paradoxically, Nigerians have never been poorer.
Four in 10 citizens now live below the World Bank’s $2.15 poverty line, while the nation tops the misery index in Africa, outpacing its peers in Mexico, Indonesia, Côte d’Ivoire, and Ethiopia. Inflation hovers at punishing double digits, and a 70 percent naira devaluation has eroded the little wealth households once clung to. Thirty-three million Nigerians are at risk of acute hunger in a country that exported food a generation ago. The paradox is glaring: while revenue soars, living standards collapse.
This is the bitter fruit of poorly sequenced reforms. The removal of petrol subsidies, the naira float, and aggressive tax overhauls were long overdue; Nigeria’s economy was on a collision course, and the old model was unsustainable. But reforms without cushioning measures have turned a necessary correction into a humanitarian crisis. The government chose textbook economics over political realism, imposing pain before preparing citizens for it.
President Tinubu’s administration has argued that Nigerians are going through a “readjustment period”, and investment bank Renaissance Capital describes this moment as a “lag phase”. This is true in part: fiscal stability will take time, and an immediate welfare boom is a fantasy. Eleven months after its celebrated cash transfer scheme was launched, only one-third of the 15 million targeted households have received support, according to the IMF. The same IMF has warned that Nigeria’s weak safety nets leave the vulnerable exposed.
“Hunger and despair are not ‘adjustment pains’; they are symptoms of governance failure. When reform success is measured by revenue collection rather than poverty reduction, policymakers lose sight of their mandate.”
The truth is that soaring revenue is being devoured by debt servicing and recurrent spending. Nigeria’s debt-service-to-revenue ratio remains among the world’s highest, and too little is left for schools, hospitals, or infrastructure. Instead of relief, citizens feel only austerity.
The states and local governments, meanwhile, have quietly become the biggest beneficiaries of this windfall. FAAC allocations to states hit ₦4.08 trillion in eight months, more than all of last year, while local councils received a record ₦2.58 trillion. Yet rural poverty is rising fastest, with 75.5 percent of rural Nigerians living below the poverty line. Governors celebrate bigger allocations while their citizens starve. Few states publish transparent accounts of how these funds are spent. In a federal structure where 774 local councils receive direct allocations, Nigeria should not have this level of rural deprivation.
Economic reform must be followed by political reform. A transparent, performance-linked fiscal structure is overdue. States and councils should be compelled to publish quarterly spending reports, showing how FAAC inflows translate into services. Without accountability at the sub-national level, federal policy victories are wasted.
The Tinubu administration also faces a choice: whether to persist with growth at any cost or embrace growth with equity. That requires bold trade-offs, temporary tax breaks for manufacturers and food producers, targeted fuel transport subsidies for farmers, and an overhaul of agricultural security architecture. Inflation cannot be fought by monetary policy alone; insecurity in food-growing regions is now a macroeconomic problem.
Some will argue that Nigeria is on the right path and needs patience. That argument holds merit; floating the naira and ending subsidies were painful but necessary steps to prevent fiscal collapse. Yet patience is a luxury millions of Nigerians cannot afford. Hunger and despair are not “adjustment pains”; they are symptoms of governance failure. When reform success is measured by revenue collection rather than poverty reduction, policymakers lose sight of their mandate.
Nigeria’s misery is not inevitable. It is a consequence of poor sequencing, weak safety nets, and opaque governance. The federal government must lead with transparency, but governors and local officials cannot remain spectators. They are flush with cash; it is time Nigerians saw proof of it in functioning schools, secure roads, and food markets free of banditry.
The revenue boom is an opportunity to rewrite Nigeria’s economic story. But if reform is not paired with social protection, accountability, and strategic investments, this era will be remembered not as a turning point, but as the moment Nigeria proved that a government can be richer than ever while its people sink deeper into misery.
Source: BusinessDay
