The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has officially launched the process of reviewing the nation’s Revenue Allocation Formula (RAF), which determines how funds are distributed among the federal, state, and local governments.
Chairman of the Commission, Mohammed Shehu, disclosed this on Monday at a press briefing in Abuja. He explained that the review was long overdue, given that the last adjustment was carried out in 1992.
Shehu said the objective is to develop “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 the constitutional roles.”
At present, the Federal Government receives 52.6 percent of national revenue, while states take 26.7 percent, and local governments are allocated 20.6 percent. Additionally, one percent each goes to the Federal Capital Territory, the ecological fund, natural resources, and the stabilisation fund.
Quoting Paragraph 32 (b), Part I of the Third Schedule to the 1999 Constitution (as amended), Shehu reminded Nigerians that the RMAFC is constitutionally empowered to “review, from time to time, the revenue allocation formulae and principles in operation to ensure conformity with changing realities.”
He added: “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.”
The RMAFC boss pointed out that recent constitutional amendments passed by the Ninth National Assembly have shifted new responsibilities such as electricity generation, railways, and correctional facilities to state governments, creating heavier financial and administrative demands on them.
He stressed that the changing landscape has made it crucial to reassess Nigeria’s fiscal federalism, with the aim of fostering state-level economic growth and reducing dependence on the federal purse.
Shehu assured that the exercise would be broad 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.”
