RMAFC begins review of revenue allocation formula

RMAFC begins review of revenue allocation formula

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has commenced a fresh review of Nigeria’s revenue allocation formula, in response to the recently amended constitution which devolved more powers and responsibilities to states and local governments.

Speaking at a press briefing in Abuja yesterday, the Chairman of RMAFC, Mohammed Shehu, explained that the new constitutional provisions had shifted significant responsibilities such as electricity, railways, and correctional centres to sub-national governments. He said this development has placed “financial and administrative burdens” on states and local governments, making a review of the current revenue-sharing arrangement inevitable.

“This situation  has made it essential to re-evaluate the structure of fiscal federalism in order to foster economic growth in individual states, enabling them to become independent from the central government and ensuring equity, responsiveness, and sustainability”, Shehu said.

The RMAFC boss reminded Nigerians that the last comprehensive review of the revenue formula was undertaken in 1992, while several executive orders issued between May 2002 and now have only slightly modified the formula.

“As you may be aware,” he noted, “Paragraph 32 (b), Part I of the Third Schedule of the 1999 Constitution of the Federal Republic of Nigeria (as amended) mandates the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) to review, from time to time, the revenue allocation formulae and principles in operation to ensure conformity with changing realities.

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“In line with this constitutional responsibility, and in response to the evolving socio-economic, political, and fiscal realities of our nation, the commission has resolved to initiate the process of reviewing the revenue allocation formula to reflect emerging socio-economic realities. As you may be aware, since that time, Nigeria has undergone profound transformations demographically, economically and constitutionally”, he added.

According to Shehu, the overarching goal of the review is to ensure “a fair, just, and equitable revenue-sharing formula that reflects the current responsibilities, needs, and capacities of the three tiers of government — federal, state, and local governments — in line with their constitutional roles.”

He noted that the commission would carefully examine the obligations of each tier, their service delivery performance, fiscal strengths, and developmental gaps across the country.

Currently, the revenue formula stands at 52.68 per cent for the federal government, 26.72 per cent for states, and 20.60 per cent for local governments. However, Shehu revealed that the commission is considering a shift that would see “more allocations for both the states and local governments” to enable them to meet their expanded constitutional mandates.

The review process, expected to be completed within the year, will involve broad consultations across all 36 states and the Federal Capital Territory to secure inputs and buy-in from stakeholders.

RMAFC begins review of revenue allocation formula