Nigeria’s revenue allocation formula between the three tiers of government has not been amended in 28 years even though the 1999 Constitution charges the Revenue Mobilisation, Allocation and Fiscal Commission [RMAFC] to undertake its review from time to time, the commission’s chairman Engineer Elias Mbam said in Abuja.
Part 1, paragraph 32(b) of the third schedule to 1999 Constitution (as amended) empowers the commission to review the revenue allocation formula from time to time in order to conform with changing realities.
Chairman Mbam said other reasons why a review is imperative include changes in the country’s political structure in 1996 with the creation of six new states and increase in the number of Local Governments from 589 to 774.
He said considerable changes arising from some policy reforms also altered the relative share of responsibilities of the various tiers of Government.
In addition, he said, inadequate/decaying infrastructure, heightened insecurity, ecological challenges including like global warming, flooding, desertification and population explosion; apparent mismatch between statutorily assigned functions and tax powers of each of the three levels of government in the current formula, as well as agitation for a review by various interest groups including States and Local Governments all make a review imperative.
Under the current sharing formula, the Federal Government’s share [including Special Funds] is 52.68%; State Governments get 26.72% while Local governments get 20.60%. Federal Government’s share includes Consolidated Revenue Fund, 48.50%; Federal Capital Territory, 1.00%; Development of Natural Resources, 1.68%; Ecological Fund, 1.00% and Stabilization Fund, 0.50%.
The commission, the chairman said, “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.”
It has already commenced the process and will study fiscal matters, review the literature on revenue allocation, invite memoranda from the public, visit the 36 states and 774 local governments as well as consult widely with major stakeholders, including elder statesmen.
RMAFC expects to conclude this work by the end of this year with the submission of a draft new formula to the President who could then table it before the National Assembly to enact a new law, Mbam said.
