The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has commenced the process of reviewing Nigeria’s revenue-sharing formula to reflect current realities and ensure a fairer distribution of national resources.
Chairman of the Commission, Mohammed Shehu, made the disclosure on Monday in Abuja while speaking to journalists on the need to adjust the existing formula which has remained unchanged since 1992.
Why the review?
Shehu explained that Nigeria has undergone significant political, economic, demographic, and social transformations over the past three decades, making the old formula outdated.
“The current revenue allocation formula was designed in 1992, over thirty years ago. Since then, our country has grown and changed in ways that the formula no longer adequately addresses. This review is part of our constitutional responsibility to ensure that revenue distribution reflects the present-day roles, responsibilities, and challenges of the federal, state, and local governments,” he said.
He added that the move was also in line with Paragraph 32(b), Part I of the Third Schedule of the 1999 Constitution (as amended), which mandates the RMAFC to periodically review revenue allocation principles and advise the government accordingly.
The Current Formula
The existing sharing arrangement stands as follows:
Federal Government – 52.6%
State Governments – 26.7%
Local Governments – 20.6%
Special Allocations (each 1%) – Federal Capital Territory, Ecological Fund, Natural Resources Development Fund, and Stabilisation Fund.
Past Proposals
Over the years, there have been attempts to review the formula, though none has been fully implemented:
2001 Proposal: RMAFC recommended 41.3% for the Federal Government, 31% for states, and 16% for local governments, with 11.7% for special funds. This was never adopted.
2014 National Conference: Delegates proposed 42.5% for the Federal Government, 35% for states, and 22.5% for local governments, citing increasing responsibilities at subnational levels.
2021 RMAFC Review: The Commission submitted a draft recommending 45.17% for the Federal Government, 29.79% for states, and 21.04% for local governments, with 4.0% for special funds. The proposal reached the Presidency but was not transmitted to the National Assembly for legislative action.
Why It Matters Now
Shehu stressed that the review will help address fiscal imbalance, reduce over-dependence on the centre, and empower states and local governments to meet their developmental responsibilities.
“Times have changed. The formula must change too, in order to strengthen our federal system, reduce tension over resource allocation, and promote fairness and efficiency in governance,” he said.
The Commission will engage stakeholders across the federation in the coming weeks before finalising its recommendations for the President and subsequent presentation to the National Assembly.
