RMAFC to review revenue allocation formula — first major change in 33 years

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) says it has commenced a fresh review of Nigeria’s revenue allocation formula among the federal, state, and local governments.

The development comes more than three decades after the last adjustment.

Speaking at a press briefing on Monday in Abuja, Mohammed Shehu, chairman of RMAFC, said the last comprehensive review of the RAF was carried out in 1992, with subsequent modifications through executive orders from 2002 to date.

Under the existing arrangement, the federal government receives 52.68 percent of revenue from the federation account, while states and local governments get 26.72 percent and 20.60 percent, respectively.

In 2022, RMAFC submitted a proposal for a new law that aimed to reduce the federal government’s share to 45.17 percent, increase the shares of states and local governments to 29.79 percent and 21.04 percent, respectively.

During the press conference, Shehu described the exercise as “long overdue” given the country’s shifting economic and political realities.

According to Shehu, Nigeria has experienced “significant demographic, economic and constitutional change”.

“The recent constitutional amendments, which devolved responsibilities such as power generation, railways, and correctional services to subnational governments, have placed financial and administrative burdens on them,” he said.

“This situation has made it essential to reevaluate the structure of fiscal federalism to foster economic growth and ensure sustainability.”

The chairman emphasised that the commission aims to produce a fair, just, and equitable revenue sharing formula that reflects the current responsibilities, needs, and capacities of the three tiers of government in line with their constitutional roles.

‘PROVIDE A WORKABLE, ACCEPTABLE FORMULA’

While receiving a delegation from RMAFC led by its chairman, in Abuja, on Monday, George Akume, the secretary to the government of the federation (SGF), asked the commission to ensure due diligence in reviewing the revenue allocation formula for the country.

In a statement by Segun Imohiosen, director, information and public relations to the SGF, Akume said he was confident in the capacity of the commission’s management to deliver on its mandate of producing a comprehensive revenue sharing framework.

The SGF assured the delegation of his office’s support in finalising the exercise, while stressing that the formula must prioritise “irreducible minimum allocation” to some ministries, departments, and agencies (MDAs), particularly the ministry of defence, because of its critical role in safeguarding peace and protecting Nigeria’s territorial sovereignty.

On his part, Shehu said the commission is already working on a new formula and would soon forward a draft to the SGF’s office for review before it is transmitted to the national assembly for approval.