Findings from the FAAC report for February 2026, which captures revenues generated in January, show that the Customs Service no longer receives any allocation under the cost-of-collection framework. The line item that typically reflects such deductions recorded N0.00 for January 2026, a sharp drop from the N24.01bn the agency received in December 2025.
Despite this change, other revenue-generating agencies continued to receive their statutory deductions. The Nigerian Upstream Petroleum Regulatory Commission received N21.44bn as a four per cent cost of collection, while the Nigerian Revenue Service got N44.16bn under the same arrangement for the month.
The development stems from the implementation of the Nigerian Customs Service Act, 2023, which introduces a new funding structure for the Customs Service. Under the Act, the agency is now financed through a statutory charge of not less than four per cent of the Free-on-Board (FOB) value of imports, rather than deductions from the Federation Account.
Confirming the shift, the National Public Relations Officer of the Customs Service, Abdullahi Maiwada, said the agency no longer collects the seven per cent surcharge from FAAC and should not be expected to receive allocations from the committee going forward.
He explained that the new model—referred to as the “Financing of the Customs Service”—is based on import values and now serves as the primary source of funding for the agency’s operations.
According to him, FAAC distributions are strictly meant for the three tiers of government—federal, state, and local—and the Customs Service is no longer part of that sharing structure.
Section 18 of the Act outlines multiple funding sources for the agency, including the four per cent FOB charge, revenues from cost-based user fees, budgetary allocations where applicable, and grants or donations from development partners. It also empowers the President to propose an increase in the charge, subject to approval by the National Assembly, if justified by the service’s governing board.
The reform marks a significant shift in the financing of one of Nigeria’s largest revenue-generating agencies and is expected to impact how federally collected revenues are distributed.
Historically, revenue agencies like Customs deducted their cost of collection before remitting the balance into the Federation Account. With the removal of the seven per cent deduction, more funds could potentially be available for distribution among the three tiers of government.
However, the new arrangement also introduces concerns about transparency, as the agency’s earnings are now tied to trade volumes and import values rather than clearly itemised deductions within FAAC reports.
Available FAAC data shows that the Customs Service generated N282.83bn in 2025, reinforcing its position as a major contributor to non-oil revenue alongside the Nigerian National Petroleum Company Limited and the Nigerian Revenue Service.
The agency remains responsible for collecting import duties, excise duties, and other trade-related taxes on behalf of the Federal Government, making it a critical component of Nigeria’s efforts to reduce reliance on crude oil revenues.
Meanwhile, state commissioners of finance have called for a periodic review of cost-of-collection arrangements across revenue-generating agencies, warning that high deductions by some institutions continue to reduce funds available for distribution.
The concern was raised during deliberations at a FAAC retreat held in Enugu State, where participants described high collection costs as a major drain on the Federation Account.
In a communique issued at the end of the three-day meeting, stakeholders resolved that cost-of-collection frameworks should be regularly reviewed, benchmarked against international best practices, and linked to efficiency and performance outcomes.
Finance commissioners from several states also stressed the need for transparent, performance-based cost structures to ensure that a larger share of collected revenues flows into the Federation Account.
Analysts note that while the removal of the seven per cent deduction could increase distributable revenue, the overall fiscal impact of the new model will depend on trade volumes and the total value of imports, which determine the four per cent FOB charges collected by the Customs Service.
The reform comes amid broader efforts by the government to strengthen fiscal transparency, improve revenue mobilisation, and maximise non-oil income to support national development programmes.