New Revenue Sharing Formula Ready This Year, Says RMAFC

James Emejo

The Chairman, Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mr. Elias Mbam, yesterday said the commission has commenced the process of reviewing the existing Revenue Allocation Formula (RAF) among the federal, state and local governments.

He said the new formula would be ready before the end of 2021 and would be submitted to President Muhammadu for onward transmission to the National Assembly.

In the current sharing arrangement, the federal government (Including special funds) is entitled to 52.68 per cent while state governments are to receive 26.72 per cents and local governments are to receive 20.60 per cent.

Of the federal government’s share of 52.68 per cent share of revenue, 48.68 per cent was further allocated to the Consolidated Revenue Fund (CRF) with another one per cent given to the Federal Capital Territory (FCT).

Also, 1.68 per cent is allocated to the Development of Natural Resources while one per cent is allotted to the Ecological Fund as well as 0.50 per cent to the Stabilisation Fund.

Mbam said the review would focus on the vertical allocation of the revenue allocation formula – to the federal, state and local governments.

Addressing journalists in Abuja, the RMAFC boss pointed out 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.

He also said the political structure of the country had since changed with the creation of six additional states in 1996, bringing the number of states to 36 while the number of local governments also increased from 589 to 774.

He added that there has been 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.

Mbam said the review was also necessitated by the inadequate and decaying infrastructure which had heightened widespread internal security challenges across the country.

He said ecological challenges like global warming, desertification, flooding and population explosion as well as the inability of the current vertical formula to adequately address the apparent mismatch between statutorily assigned functions and tax powers of each of the three levels of government informed the decision to embark on a fresh exercise.

Furthermore, he pointed out that the agitation for a review by various interest groups including states and local governments were also considered.

He said, “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 said one of the major responsibilities of the commission was to review from time to time, the revenue allocation as specified in Part 1, paragraph 22 (b) of the Pay Schedule of the 1999 Constitution as amended.

Mbam said the Constitution empowers the commission to review from time to time, the revenue allocation formula and principles in operation to ensure conformity with changing realities.

He added, “Provided that any formula which has been assented by the Act of the National Assembly shall remain in force for a period of not less than five years from the date of commencement of the Act.

“Pursuant to the above and the need to review the allocation formula, the commission has commenced the process of the review.”

However, previous attempts by the commission in 2001, 2002, 2003, 2004 and 2014 aimed at producing a new sharing template for the tiers of government were either withdraw mid-way or adjudged as inconclusive.

The RMAFC chairman however, expressed optimism that the latest exercise would be less controversial and will produce a new sharing formula that will be passed into law.