Defence & Security Financing in Nigeria: Recent Developments
In response to increasing national security challenges and the need to strengthen Nigeria’s defence capabilities, the Nigeria Tax Act, 2025 (No. 7) establishes a dedicated financing mechanism in the form a Defence and Security Infrastructure Fund (the “Fund”). The Fund is designed to support the implementation of national security initiatives, modernize defence infrastructure, and foster the development of the domestic defence industry. Amongst others, the Fund will ensure a predictable and sustainable source of funding for operational and strategic security needs across Nigeria.
Mechanics of the Fund
A. Funding Source
The funding source of the Fund is the Development Levy created under Section 59 of the Nigeria Tax Act, 2025. The Development Levy is a 4% tax imposed on the assessable profits of Nigerian companies, other than small companies and non-resident companies. Under the Nigeria Tax Act, 2025, ten percent (10%) of the aggregate funds attributable to the Development Levy is to be paid into Fund.
B. Statutory Purpose
Monies in the Fund must be used exclusively for operational purposes to enhance security in Nigeria.
C. Management of the Fund
The Fund is to be managed jointly by the following security agencies and bodies:
A. Nigerian Army, Nigerian Navy, and Nigerian Air Force (Armed Forces Act, Cap. A20, Laws of the Federation of Nigeria, 2004)
Nigerian Police Force (Police Act, Cap. P19, Laws of the Federation of Nigeria, 2004)
Department of State Security (National Security Agencies Act, Cap. N74)
Nigerian Security and Civil Defence Corps (NSCDC Act, No. 6, 2007)
Nigerian Forest Security Service (Nigerian Forest Security Service Act, 2025)
Defence Intelligence Agency (Decree 19 of 1986)
Office of the National Security Adviser (National Security Agencies Act, 1986)
D. Outgoing Payments
Payments due to each agency shall be credited directly to the agency’s account with the Central Bank of Nigeria. Agencies shall apply the Fund in line with their statutory functions, including operational obligations, reporting, maintenance, and accountability.
E. Fund Allocation
The 10% allocation from the development levy shall be distributed as follows:
Agency | Allocation (%) |
Defence Headquarters | 8% |
Nigerian Army | 20% |
Nigerian Navy | 12.5% |
Nigerian Airforce | 12.5% |
Office of the National Security Adviser / Counter-Terrorism Center | 6% |
Nigerian Police Force | 10% |
Police Trust Fund | 8% |
Department of State Security | 9% |
Nigerian Security and Civil Defence Corps | 5% |
Nigerian Forest Security Service | 5% |
Defence Intelligence Agency | 4% |
Conclusion
The establishment of the Defence and Security Infrastructure Fund represents a significant step towards strengthening Nigeria’s security architecture. By providing a dedicated, legislatively-backed source of funding, the Fund aims to enhance operational readiness, support strategic initiatives, and foster accountability among security agencies. Stakeholders are advised to monitor the implementation of the Fund to ensure transparency and alignment with national security objectives.
Olu A.
LL.B. (UNILAG), B.L. (Nigeria), LL.M. (UNILAG), LL.M. (Reading, U.K.)
Olu is a Partner in the Firm’s Transactions & Policy Practice. Admitted as a Barrister & Solicitor of the Supreme Court of Nigeria in 2009, he has spent over a decade advising clients on high-value transactions and policy matters at some of Nigeria’s leading law firms.
olu@balogunharold.com
Kunle A.
LL.B. (UNILAG), B.L. (Nigeria), LL.M. (UNILAG), Barrister & Solicitor (Manitoba)
Kunle is a Partner in the Firm’s Transactions & Policy Practice. Admitted as a Barrister & Solicitor of the Supreme Court of Nigeria in 2009, he has spent over a decade advising clients on high-value transactions and policy matters at some of Nigeria’s leading law firms.
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