The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), says a revised revenue allocation formula will be ready by December 2021.
RMAFC chairman, Elias Mbam, who disclosed this at a press briefing, said the document would be presented to President Muhammadu Buhari when ready.
According to the country’s current revenue sharing arrangement, the federal government (including special funds) gets 52.68 per cent while state governments get 26.72 per cent and local governments receive 20.6 per cent.
Of the federal government’s share of 52.68 percent share of revenue, 48.68 percent was further allocated to the consolidated revenue fund (CRF) with another one percent given to the federal capital territory (FCT).
Also, 1.68 percent is allocated to the development of natural resources while one percent is allotted to the ecological fund as well as 0.5 percent to the stabilisation fund.
Speaking with reporters, the RMAFC boss recalled that the review commenced in June and was optimistic that it would reach the president and be sent to the National Assembly before the year ends.
He noted that the consideration for the review was informed by the fact that the last general review of the formula was carried out 28 years ago in 1992.
Mbam said the review would focus only on vertical allocation, which covers allocation to the federal, state, and local governments.
“The revenue allocation formula review does not imply reduction. It does not imply reducing the cost of government. It is simply that we look at the responsibilities of each tier of government and what percentage of the federation revenue would be appropriate for the type of responsibility that tier of government has.
“Because of what we have learnt, we have decided that we will handle first the vertical revenue allocation formula, which is sharing between states and federal government and local governments, not sharing among states or local governments, which would come as the second phase of this review. This is going to be less controversial, and we will achieve our goals.”
According to him, the political structure of the country had changed with the creation of six additional states in 1996, bringing the number of states to 36 while the number of LGAs also increased from 589 to 774, since the last review, in addition to considerable changes arising from policy reforms that altered the relative share of responsibilities of the various spheres of government including controversies over the funding of primary education, primary health centers among others.
The RMAFC chairman said the review was further necessitated by the inadequate and decaying infrastructure which had heightened widespread internal security challenges across the country, among others.
“In view of the above, the commission has commenced the review of the current vertical revenue sharing arrangement with a view to producing a fair, just, and equitable revenue sharing formula that will be acceptable to majority of Nigerians,” he added.
