The Federal Government has eliminated the longstanding 7% cost-of-collection deduction previously retained by the Nigerian Customs Service (NCS) from Federation Account revenues, ending the agency’s direct participation in FAAC allocations.
The February 2026 FAAC report, covering January 2025 revenue, shows the NCS recorded N0.00 under the cost-of-collection line item compared with N24.01 billion received in December 2025. Meanwhile, other agencies continued receiving their statutory shares: the Nigerian Upstream Petroleum Regulatory Commission collected N21.44 billion (4% cost of collection), and the Nigeria Revenue Service received N44.16 billion (4% cost of collection).
The change, effective from January 2026, stems from the Nigerian Customs Service Act 2023. Under the new framework, NCS funding now derives from a statutory charge of at least 4% of the Free-on-Board (FOB) value of imports, rather than deductions from shared federation revenues.
Confirming the policy shift, NCS National Public Relations Officer Deputy Controller Abdullahi Maiwada stated: “We no longer collect the 7% surcharge as cost of collection from the Federation Account. The Nigerian Customs Service Act 2023 establishes a Financing of the Customs Service mechanism based on 4% of the FOB value of imports. That is now how we fund our operations.”
He emphasised that FAAC distributions are reserved exclusively for the three tiers of government—federal, state, and local—and that NCS is no longer part of the sharing arrangement. The funding model is anchored in Section 18 of the 2023 Act, which specifies alternative revenue sources to support the service’s administrative and operational needs.
The reform removes NCS from the monthly FAAC distribution table, potentially increasing the pool available to federal, state, and local governments by eliminating the automatic 7% carve-out. It also aligns the agency’s financing more directly with import volumes and values, creating a performance-linked revenue stream independent of federation account sharing.
The transition is expected to enhance fiscal transparency and reduce perceived leakages in revenue-sharing mechanisms while allowing NCS to maintain operational autonomy. Stakeholders will monitor the impact on customs efficiency, trade facilitation, and overall federation account inflows in the coming months as the new funding structure takes full effect.
