Nigeria’s Revenue Crisis Deepens: ₦20.74 Trillion Budget Gap Persists Despite Oil Price Surge

By FIDELUS ZWANSON

Revenue Falls Far Below Budget

NIGERIA’S statutory revenue fell ₦20.74 trillion short of its budget target between January and October 2026, despite a sharp rise in international crude oil prices following the United States-Iran war.

Figures from the Office of the Accountant-General of the Federation showed that statutory revenue totalled ₦26.14 trillion during the 10-month period, against a budget projection of ₦46.87 trillion.

Consequently, the shortfall reached 44.24 per cent of the amount budgeted for the period, highlighting the challenge of converting favourable global oil prices into sufficient government revenue.

The figures appeared in documents associated with the Federation Account Allocation Committee’s September meeting at the Federal Ministry of Finance headquarters in Abuja. The technical sub-committee’s report, dated 14th October, was obtained on Monday and covered the August 2026 accounts.

Crude Oil Prices Surge Amid Middle East Conflict

The revenue shortfall comes against the backdrop of a sharp increase in oil prices after the United States and Israel launched strikes against Iran on 28 February 2026.

The conflict disrupted shipping through the Strait of Hormuz, a critical route for global oil and gas supplies. As a result, uncertainty over exports and energy shipments placed upward pressure on international crude prices.

Nigeria’s flagship crude grade, Bonny Light, rose from a pre-war average of $70.14 per barrel to $123.97 in a dated price quote on 22 October. That represented an increase of approximately 76.75 per cent.

At $123.97, Bonny Light traded $59.12, or 91.16 per cent, above the Federal Government’s 2026 budget benchmark of $64.85 per barrel. However, a separate report on 24 October quoted the grade at about $115 per barrel, still 63.96 per cent above its pre-war average.

Although these prices offered the prospect of higher export earnings, the revenue figures showed that government receipts remained below budget throughout the period. Moreover, oil prices alone do not determine how much enters the Federation Account. Production volumes, export performance, exchange rates, collection efficiency and other revenue sources also influence the final amount.

Monthly Collections Reveal Persistent Shortfalls

The monthly figures show that statutory revenue remained below the ₦4.687 trillion budget benchmark in every month from January to October.

In January, collections stood at ₦1.63 trillion, leaving a ₦3.06 trillion shortfall, equivalent to 65.19 per cent of the target. February brought some improvement, with receipts rising to ₦1.96 trillion, an increase of ₦325.35 billion, or 19.94 per cent. Nevertheless, collections remained ₦2.73 trillion below budget.

The improvement reversed in March, when revenue dropped by ₦395.14 billion, or 20.19 per cent, to ₦1.56 trillion. That month recorded the weakest performance of the first quarter, with collections missing the target by ₦3.13 trillion, or 66.68 per cent.

April delivered a modest recovery as revenue climbed to ₦1.70 trillion, up ₦137.91 billion, or 8.83 per cent. Even so, the shortfall remained ₦2.99 trillion, representing 63.74 per cent of the monthly target.

The rebound gathered pace in May. Collections rose to ₦2.38 trillion, an increase of ₦678.22 billion, or 39.90 per cent. June added further gains, with receipts reaching ₦2.65 trillion, up ₦273.62 billion, or 11.51 per cent. Despite the improvement, the respective monthly deficits remained ₦2.31 trillion in May and ₦2.04 trillion in June.

July & August Bring Stronger Receipts

Revenue performance improved significantly in July, when collections reached ₦3.95 trillion, including a ₦250 billion augmentation. The figure represented a ₦1.30 trillion increase, or 48.99 per cent, from June. Nevertheless, July still fell ₦736.50 billion short of the monthly benchmark.

August recorded the strongest monthly collection of the period at ₦4.36 trillion. Receipts rose by ₦408.09 billion, or 10.33 per cent, from July, leaving a deficit of ₦328.41 billion, equivalent to just 7.01 per cent of the target.

However, the momentum did not last. September collections plunged to ₦2.85 trillion, a month-on-month decline of ₦1.51 trillion, or 34.61 per cent. The shortfall consequently widened to ₦1.84 trillion, or 39.19 per cent.

October brought a partial recovery as revenue increased by ₦246.38 billion, or 8.64 per cent, to ₦3.10 trillion. Even then, collections remained ₦1.59 trillion below the target, leaving a 33.94 per cent deficit.

Although October’s receipts were approximately 89.77 per cent higher than January’s, that nominal increase did not close the gap between actual collections and the budget.

Later-Month Gains Fail to Close the Gap

The figures also reveal a shift in the distribution of receipts over the period. Between January and June, statutory revenue totalled ₦11.88 trillion. From July to October, collections reached ₦14.26 trillion, including July’s ₦250 billion augmentation.

Thus, the four-month total exceeded the first six months’ collections by ₦2.38 trillion, despite covering a shorter period.

The stronger performance from July coincided with elevated international oil prices. However, the available figures do not establish how much of the increase came directly from the oil-price rally or from changes in production, exports, exchange rates and other revenue sources.

The sharp decline in September and incomplete recovery in October also demonstrate how quickly improvements can weaken. Consequently, the overall shortfall remained substantial even after August brought collections close to the monthly benchmark.

Revenue Weakness Raises Budget Implementation Concerns

The shortfall has implications for the Federal Government and the state and local governments that depend on Federation Account allocations. When distributable revenue falls below expectations, authorities face greater pressure to finance capital projects, maintain public services and meet other budget commitments.

Higher crude prices can increase government earnings, but Nigeria must also produce and export sufficient volumes, collect the proceeds due to the Federation and convert those earnings into distributable revenue.

The report separately recorded ₦39.91 billion in Electronic Money Transfer Levy proceeds shared in January. It showed no further amounts under that column from February to October. The levy was listed separately from the statutory revenue figures used for the monthly budget comparison.

Finance Minister Questions Unrealistic Revenue Projections

The figures also echo concerns raised by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, who recently acknowledged that Nigeria’s budgets have often relied on unrealistic revenue assumptions.

Speaking at Chatham House in London, Oyedele said the country had repeatedly based its projections on optimistic expectations rather than realistic assessments of its earning capacity.

“We haven’t been doing the budget right. We do projections that are sometimes based on faith and hope. You don’t run a country based on faith,” he said.

Overall, the ₦20.74 trillion gap highlights the difficulty of meeting Nigeria’s revenue targets, even when global oil prices rise sharply. The figures do not establish that the country gained nothing from the higher prices. Rather, they show that statutory revenue remained far below the amount budgeted for the first 10 months of 2026.