The Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) on Monday announced the commencement of the process for review of the Revenue Allocation Formula (RAF) between the federal, states, and local governments.
The Chairman of the RMAFC, Mohammed Shehu, who announced this at a news conference in Abuja, noted that the review became necessary following current economic realities since the last review in 1992.
According to Shehu, the review aimed to produce a fair, just, and equitable revenue-sharing formula that reflected the current responsibilities, needs, and capacities of the three tiers of governments in line with the constitutional roles.
Under the current revenue allocation formula, the Federal Government gets a share of 52.6 per cent, 26.7 per cent for the state governments, and 20.6 per cent is allocated to the local governments.
The committee also allotted one per cent each to the Federal Capital Territory, ecological fund, natural resources, and the stabilisation fund under the vertical revenue allocation.
Speaking further, he quoted Paragraph 32 (b), Part I of the Third Schedule of the 1999 Constitution of the Federal Republic of Nigeria (as amended), which mandates the RMAFC to “review, from time to time, the revenue allocation formulae and principles in operation to ensure conformity with changing realities”.
“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 said.
According to him, the recent constitutional amendments by the Ninth National Assembly, which devolved certain responsibilities from the Exclusive List to the Concurrent Legislative List, such as generation, transmission, and distribution of electricity; railways and prisons (correctional centres), have placed financial and administrative burdens on sub-national governments.
The situation, he explained, made it essential to reevaluate the structure of fiscal federalism to foster economic growth in individual states, enabling them to become independent from the central government and ensuring equity, responsiveness, and sustainability.
He promised that the commission would carefully assess the needs, service delivery obligations, fiscal performance, and developmental disparities, adding that the review would be inclusive, data-driven, and transparent.
“It will involve broad-based consultations with critical stakeholders, including the presidency, national assembly, state governors, ALGON, the judiciary, MDAS, civil society organisations, traditional rulers, the organised private sector, and development partners.
“The commission is also committed to integrating cutting-edge research, empirical data, and international best practices in its analysis,” he added.
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