Revenue Commission commences fresh allocation formula

By Emma Ujah,  Abuja Bureau Chief &  Favour Isaac

The Revenue Mobilisation Allocation and Fiscal Commission, (RMAFC) has commenced a fresh review of the formula for allocation of the national revenue among the three tiers of government.

Disclosing this yesterday at a press briefing in Abuja, the Chairman of the Commission, Dr. Mohammed Shehu, stated, “The Commission has resolved to initiate the process of reviewing the revenue allocation formula to reflect emerging socio-economic realities.”

The current formula stands at:  52.68%; States 26.72%; and 20.60% to the Federal, States and Local Governments, respectively.  

The Commission had prepared a new Revenue Allocation Formula in 2022 but it was jettisoned by the 9th  Assembly due to the Constitutional Amendment which it undertook, which devolved certain responsibilities such as generation, transmission, and distribution of electricity; railways; and prisons (Correctional Centres), from the Exclusive to the Concurrent Legislative List, which have placed financial and administrative burdens on sub-national governments.  

Dr. Shehu stated further, “This situation has made it essential to reevaluate the structure of fiscal federalism in order to foster economic growth in individual states, enabling them to become independent from the central government and ensuring equity, responsiveness, and sustainability.

  “The aim of this review is to produce a fair, just, and equitable revenue-sharing formula that reflects the current responsibilities needs, and capacities of the three tiers of government -Federal, State, and Local Governments- in line with their constitutional roles.  

“The Commission will carefully assess the needs, service delivery obligations, fiscal performance, and developmental disparities.”  

He promised that the review would be inclusive, data- driven, and transparent, adding, “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.”  

Earlier in his welcome address, the Chairman of the Revenue Allocation Formula Committee, Alh. Kabir Mashi, said the exercise was in line with the organisation’s mandate as provided in Paragraph 32(b) Part I to the Third Schedule of the 1999 Constitution empowering the commission to “review from time to time the revenue allocation formulae and principles in operation to ensure conformity with changing realities.”

He disclosed that the Commission had produced a report on Vertical Revenue Allocation Formula in April, 2022 which was jettisoned on the basis that the constitutional amendment by the 9th National Assembly in 2023 affected the responsibilities of the various tiers of government under the 1 and 2nd Schedule of the 1999 Constitution (as amended).

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