The Nigeria Revenue Service (NRS) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) collected a combined N123.54 billion as cost of revenue collection in June 2026. This represents about 3.6 per cent of the N3.40 trillion shared by the Federal Government, states, and local governments from revenue generated in May. The significant cost has raised questions about the efficiency and economics of revenue mobilisation.
The NRS received N84.69 billion, while the NUPRC received N38.85 billion, according to Federation Account Allocation Committee (FAAC) data released by the National Bureau of Statistics. The collection fees increased by N9.78 billion, or 8.6 per cent, from N113.76 billion recorded in the previous month. This increase occurred even as total distributable revenue rose from N3.18 trillion to N3.40 trillion.
The June distribution comprised N2.65 trillion in statutory revenue and N743.67 billion in Value Added Tax (VAT). The Federal Government received N818.68 billion, states N759.14 billion, and the 774 local government councils N534.28 billion. Oil-producing states received N188.13 billion as 13 per cent derivation revenue. The cost of collection is deducted before FAAC distributions are made.
The rising cost of collection has significant implications for Nigeria's fiscal capacity. Every naira retained as a collection cost is a naira that does not enter the distributable pool for salaries, roads, healthcare, education, and other public spending. This issue is critical for Nigeria, as governments at all levels struggle with large financing gaps, infrastructure needs, and rising debt-service obligations.
The increase in collection costs comes amid efforts to strengthen domestic revenue mobilisation through tax reforms, digitisation, and wider taxpayer compliance. In 2025, Nigeria's subnational governments generated N5.15 trillion in internally generated revenue, up 40.93 per cent from N3.65 trillion in 2024. This indicates that governments are increasingly looking beyond Federation Account transfers for additional revenue.
Policymakers must assess the revenue-collection cost alongside the gains from improved mobilisation. Higher collection fees may be justified if they generate significantly larger and more sustainable revenue. However, the efficiency of the system becomes increasingly important as the government seeks to extract more resources from an economy facing pressure from high operating costs.
The N123.54 billion collected by the NRS and NUPRC in one month illustrates the scale of the financial infrastructure required to mobilise public revenue. The economic question is whether improvements in tax and petroleum revenue collection are producing enough additional income to outweigh the rising cost of collecting it. Reducing leakage and improving collection efficiency could be as important as raising more revenue.
Key points
- The Nigeria Revenue Service and NUPRC collected N123.54 billion as cost of revenue collection in June 2026.
- The cost of collection rose by N9.78 billion, or 8.6 per cent, from the previous month.
- The rising cost of collection has significant implications for Nigeria's fiscal capacity and public spending.
