Still on RMAFC’s New Funding Arrangement
Postscript by Waziri Adio
Last Sunday, I wrote about the stratospheric leap in the 2025 budget of the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC), arising from a new funding arrangement that might have issued from a good place but was clearly ill-considered and is guaranteed to lead to the usual profligacy and other abuses. RMAFC was recently handed a boon of 0.5% of the non-oil revenue of the Federation to run its operations. The immediate impact of this baffling upgrade is that the revenue of the commission was projected to jump from N3.27 billion in 2024 to N105.14 billion in 2025, a year-on-year increase of 3,115%. And not surprisingly, RMAFC planned and got legislative approval to spend the entire N105.14 billion in one year, notably by hovering up its capital spending from N206.07 million in 2024 to N75.5 billion in 2025, a staggering 36,538% increase from one year to the other.
One Ibrahim Mohammed, clearly at the instance of RMAFC, contested my position which he claimed is an “ill-conceived narrative” that betrays “a fundamental misreading of history, constitutional design and Nigeria’s present fiscal challenges.” His rejoinder was published on Wednesday in THISDAY and entitled “RMAFC’s New Funding: A Strategic Safeguard for Nigeria’s Democracy and Federalism.” He made many fantastic claims about how RMAFC was conceived as “the referee of Nigeria’s federal compact.” He then argued that the 0.5% revenue earmark granted to the commission would correct past errors which “crippled Nigeria’s economy, stunted diversification, and left the Federation Account in perpetual crisis.”
Deploying a flurry of fine words, Mr. Mohammed created the impression that multiplying the funding for RMAFC is the panacea to everything that ails not just public finance but also economic growth, federalism and democracy in the country. There is a lot to process from his leaps of logic. But Mohammed is entitled to his views. He, however, veered into wilful misrepresentations, which might mislead those not paying close attention to certain things. I will quickly address a few of his distortions, then return to the substantive issues around RMAFC itself and the special but suboptimal ways through which we fund a few government agencies, and which we need to stop.
Mohammed waxed lyrical about how Nigeria’s “founding fathers and nationalists” conceived RMAFC and how the 1999 Constitution, “like previous constitutions,” made the commission a permanent constitutional body. The only problem with this fictional rendition of history is that RMAFC came into existence in 1989, a creation of the military via Decree 49 of that year. Mr. Mohammed will be factual only if we are ready to accept General Ibrahim Babangida and his military colleagues as Nigeria’s founding fathers and nationalists. Also, RMAFC was not listed in the constitutions that predated the 1999 Constitution. There is no way that Nigeria’s constitutions from 1922 to 1979 would have had a provision for RMAFC, which only came into being in 1989. It is possible though that Mohammed took poetic licence with the expression “… the 1999 Constitution, like previous constitutions, elevated RMAFC to the status of a permanent constitution body.”
It is true that Nigeria had eight revenue commissions/committees before RMAFC was established. But these commissions, from the Philipson Commission of 1946 to the Okigbo Commission of 1980, were all ad-hoc commissions/committees and they were not written or elevated to permanent or even temporary bodies in any of the constitutions. Four of these commissions were set up pre-independence (Philipson, 1946; Hicks-Philipson, 1951; Chicks, 1953; and Raisman, 1958) and their existence couldn’t have been attributed to the visions of Nigeria’s founding fathers and nationalists, except Mohammed is granted the extraordinary liberty to use such words loosely. All the eight commissions pre-RMAFC had a few members, a limited timeframe, and a single agenda, which was to recommend new formulas for sharing revenue among the tiers of government within the Federation. It might be more optimal for the country to return to this ad-hoc format instead of having another permanent and forever evolving bureaucracy that will be insultingly brandished in our faces as the solution to everything and the one and only saviour of our federalism and democracy. We will return to this shortly.
To justify the 0.5% boon to RMAFC, Mohammed leaned on the usual crutch: global best practice. He mentioned how stable and independent funding allowed the Internal Revenue Service (IRS) of the United States, the Canadian Revenue Agency (CRA) and the South African Revenue Service (SARS) to deploy modern technology, attract top professionals, and block leakages. It is possibly lost on him that the three institutions that he referenced are tax agencies, the equivalents of our Federal Inland Revenue Service (FIRS). Could it be that Mohammed wants RMAFC to replace FIRS? Is he admitting that RMAFC might be surplus to requirement in some areas? Or is he saying that those tax agencies started bringing in more revenue because they were monitored/supervised by institutions similar to RMAFC, his beloved revenue watchdog? And if this is what he meant, could he kindly oblige us the names of such watchdogs in those countries and how their oversight marked the turning point in revenue optimisation? And by the way, it is worth stating here that IRS, CRA and SARS are not funded through the special dispensations that have bestowed on RMAFC and our revenue-collection agencies. We will return to this too.
Mohammed disclosed some of the things RMAFC would splurge its windfall on: build data centres and monitoring hubs, deploy its staff nationwide to monitor revenue at source, set up a training institute, deploy advanced technology etc., etc. He managed, maybe unwittingly, to confirm the fears that the commission is set to embark on the usual binge and to find excuse to spend money simply because it is available. Before long, RMAFC will invent reasons to balloon its staff strength, to have offices in all states and possibly all local government areas of the country, to build a new headquarters, to buy countless operational vehicles, to undertake endless local and foreign trainings and study tours etc., —all in the name of being able to effectively discharge its “constitutional” mandates and to “save our democracy from fiscal predation.” It is the predictable pattern in which agencies stretch expenditure to match available revenue. It is a form of Parkinson’s Law.
Now, to the substantive issues. The first is the way most government agencies corral “inadequate funding” as a convenient excuse, then use their role (even if tangential) in revenue mobilisation as a form of blackmail. The functions of RMAFC are spelt out in Section 32 of the Third Schedule of the 1999 Constitution and in Section 6 of the commission’s establishment act. There are basically four of them: to monitor revenue accruals to and disbursements from the Federation Account; to review revenue allocation formula; to set the salaries and allowances of political office holders; and to advise federal and state governments on measures for increasing revenue.
The budgetary allocation for RMAFC has been within the N2 billion to N3 billion range for a while. Let’s accept without conceding that an average of N2 billion annually is inadequate for RMAFC, does this really affect its capacity to carry out all its functions? The obsession, for obvious reasons, is about monitoring revenue and disbursements but the main responsibility of revenue commissions in a federal system is recommending, based on evidence and consultation, the review of the revenue allocation formula. How much is needed to do that? How many times has RMAFC recommended new formulas in the past 36 years of its existence? How has an average of N2 billion annually impeded the capacity of the commission to review emoluments of political office holders and to advise governments on how to increase revenue? How many of such has the commission undertaken? What aspect of its work has RMAFC exceeded expectations with the “little” it has had? Who has read any groundbreaking and policy-altering study done or commissioned by RMAFC on measures for improving revenue to the Federation and to the various tiers of government?
And even on the part of its function that it has chosen to prioritise (and which is rarely the main focus of other countries’ revenue commissions), how has an annual budget of N2 billion impeded its work? I have not found a compelling reason that inadequate funding is what has undermined RMAFC’s capacity to effectively carry out basic functions such as reviewing revenue allocation formula or advising governments on revenue generation or even for tracking revenue accruals and disbursement, which it has conveniently elevated as its sole reason for being. I am not a bit convinced that increasing funding to RMAFC is what will make the revenue-generating agencies to bring more money to the Federation Account. It is not RMAFC that sets the targets for and supervises these agencies. FAAC has enjoyed significant increase in revenue in the last two years largely on account of the depreciation of the national currency, and that has nothing to do with RMAFC.
The second issue is about the appropriate way to make adequate provision for public institutions. There may not be just one right way of doing this, but there are certainly a few bad ways of doing it. Allocating agencies a fixed percentage of some revenue streams is one of such bad ways. It creates more problems than it solves. In trying to address the challenge of inadequate and unpredictable funding, we end up with special agencies that become governments within government, flush with more money than they need, and inexorably serving as avenues for off-budget spending, patronage, resource misallocation and even corruption. In the particular instance of RMAFC, what should have been done is to ascertain if indeed there is a funding gap and to bridge that gap in a reasonable way, including maybe by routing its increased funding through statutory transfers as done for the National Assembly, the National Judicial Council (NJC) and a few constitutional bodies.
But granting a portion of non-oil revenue to RMAFC is like giving it a blank cheque to do as it pleases. And without missing a beat, RMAFC chose to shore up its personnel budget by 565.94%, its overhead budget by 1,096% and its capital budget by a dizzying 36,538% from one year to the other. In theory, such exuberance would have been tamed by cool heads within the organisation and by the parliament. But we should know that theory and practice in this respect are worlds apart, and that it is sensible to avoid such temptations in the first place.
The third issue is related. We need to resolve whether the approval granted by the National Economic Council (NEC) is 0.05% or 0.5%. When Professor Charles Soludo, the governor of Anambra State, briefed the press after the NEC meeting of 12th December 2024, he mentioned that NEC approved for RMAFC to receive 0.05% of Federation’s non-oil revenue. NEC is an advisory body, not an approving authority. That notwithstanding, FAAC has been allocating 0.5% of non-oil revenue to RMAFC since April 2025. We need to know the authority behind what is going on. Did the President approve the recommendation by NEC and if he did, what percentage did he approve? Are the transfers from FAAC since April based on a new law, which according to a RMAFC commissioner was signed on 2nd April 2025 but is yet to be seen anywhere including on the commission’s website? If the disbursements are based on this law, is the percentage stipulated in the law, and is it 0.05% or 0.5%? Someone also needs to explain to the rest of us how we moved from 0.05% to 0.5%. It is public resources we are talking about, and we deserve to know how 0.05% became 0.5%, where and when.
It should be noted that even 0.05% of non-oil revenue of the Federation would still have been a major boost for RMAFC. If 0.5% of non-oil revenue amounted to N105.14 billion, then it can be extrapolated that 0.05% of the same revenue handle would have translated to N10.51 billion. That would amount to more than tripling of the N3.27 billion that was allocated to the commission in the 2024 appropriation act. While I remain unconvinced that RMAFC needs more revenue based on its record even in basic things in the last 26 years and I do not support revenue earmarks, I will grudgingly concede that a budget of N10.51 billion in 2025 (which is 0.05% of Federation’s projected non-oil revenue) would have been more than appropriate. The difference of N94.63 billion between the N105.14 billion recently appropriated for the commission in 2025 and the N10.51 billion as 0.05% of non-oil revenue could be of better use across the country. Everything has an opportunity cost. I have tried to be as understanding as possible but I can’t find anything that justifies a 31-fold, year-on-year increase in revenue for RMAFC.
The last issue is that it is important that we revisit whether we really need RMAFC as a permanent body. Yes, RMAFC is listed as one of the 14 executive bodies in the constitution, but the constitution can be amended. We need to look at this not just from the standpoint of cost but of functionality. Revenue sharing is always a hot-button issue in a federal system but having a permanent revenue commission is not a universal practice. Most countries either address revenue-sharing issues through their parliaments or through ad-hoc commissions. In any case, any change in the revenue-sharing formula must be legislated. Three federal countries have permanent revenue commissions—the Commonwealth Grants Commission in Australia, the Financial and Fiscal Commission in South Africa and RMAFC in Nigeria. India and Pakistan have revenue commissions that they reconstitute every five years, the Finance Commission and the National Finance Commission respectively. None of these commissions strays into posturing as a revenue watchdog and none is funded through revenue earmark, except our RMAFC. They focus on their single mandate, generate impressive body of work and maintain a lean structure.
I am not sure that Nigeria has been better served with a permanent revenue commission, if we compare RMAFC with its few comparators elsewhere (say Australia’s CGC) or even with the ad-hoc commissions that preceded it. But if the consensus is that we should keep RMAFC as a permanent body, then we need to reconceive it as a lean organisation with top-notch experts in federal finance. We don’t need a revenue commission with 38 commissioners: the chairman, and commissioners from each of the 36 states and FCT. That’s a crowd already before you add the staff. (By the way, we have the same overblown structure for other commissions like the Federal Character Commission.) Every state doesn’t need to be represented in the revenue commission for it to be representative or be fair in its work.
A seven-member commission will serve, with a chairman and a commissioner representing each of the six geo-political zones. These are the things we should be fixing with constitutional amendments, not every hamlet wanting a state of its own. Also, we need to refine the qualification for appointment into the commission. Being “persons of unquestionable integrity and requisite qualifications and experience” is too nebulous and opens the path to turning appointments of RMAFC commissioners into mere political compensation. We need to return to a time when eminent economists like Professor Ojetunji Aboyade and Dr. Pius Okigbo headed our revenue commission.
