The Federal Government has instructed the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) to undertake a comprehensive due diligence process in the development of a new and equitable revenue allocation formula for the country.
The directive was issued by the Secretary to the Government of the Federation (SGF), Senator George Akume, during a meeting with the RMAFC management team led by its Chairman, Dr. Mohammed Bello Shehu, at the SGF’s office in Abuja on Monday.
According to Segun Imohiosen, Director of Information & Public Relations, Senator Akume expressed confidence in the Commission’s ability to deliver a robust and inclusive framework that reflects the nation’s fiscal realities.
“I am confident in the capacity of the management of the Commission to deliver on their mandate in developing a comprehensive revenue allocation formula, and I assure you of the readiness of my Office to give the necessary support to the realisation of the project,” Akume stated.
He emphasized the importance of ensuring that the proposed formula includes an irreducible minimum allocation to key Ministries, Departments, and Agencies (MDAs), particularly the Ministry of Defence, citing its critical role in maintaining national peace and safeguarding territorial sovereignty.
RMAFC Draft Formula Nears Completion
In response, RMAFC Chairman Dr. Mohammed Bello Shehu assured the SGF that the Commission is finalizing a draft of the new revenue allocation formula.
He noted that the document will be submitted to the SGF’s office for review and input before being forwarded to the National Assembly for legislative approval.
The initiative is part of ongoing efforts to reform Nigeria’s fiscal structure and ensure a more balanced distribution of resources among federal, state, and local governments. The current revenue allocation formula has remained unchanged for years, despite evolving economic and security challenges.
The proposed review is expected to address disparities in funding across sectors and improve the efficiency of public service delivery, particularly in areas of national security, infrastructure, and social welfare.
Sharing Formula
Under the current arrangement, the federal government gets 52.68% of revenue from the federation account, while states and local governments get 26.72% and 20.60%, respectively.
However, the anticipated new sharing formula seeks to reduce federal government allocation and increase allocations for state and local governments.
What You Should Know
The new revenue-sharing formula has been hanging in the balance for many years without being implemented.
- In December 2023, the RMAFC said it would begin the implementation of the new revenue-sharing formula for the country in the first quarter of 2024.
“I will assure these committee members that sometime next year, the commission will forward a new revenue allocation formula, first quarter to Mr. President, and we believe that we will forward it to the National Assembly for you to do your job on this issue. That I can assure you, sir, and the members too,” Mr. Shehu said when he appeared before the House of Representatives Committee on Finance in December 2023.
However, up until now, the federal government is still yet to make it a reality.
