Buhari to receive revised revenue sharing formula by December, says RMAFC

Elias Mbam, chairman of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC), says a revised revenue allocation formula will be presented to President Muhammadu Buhari by the end of 2021.

Mbam disclosed this during a media briefing on Tuesday in Abuja.

In June, the commission commenced the review of the revenue allocation formula.

In the current sharing arrangement, the federal government (including special funds) is entitled to 52.68 percent while state governments are to receive 26.72 percent and local governments are to receive 20.6 percent.

Of the federal government’s share of 52.68 percent share of revenue, 48.68 percent was further allocated to the consolidated revenue fund (CRF) with another one percent given to the federal capital territory (FCT).

Also, 1.68 percent is allocated to the development of natural resources while one percent is allotted to the ecological fund as well as 0.5 percent to the stabilisation fund.

Speaking with reporters, the RMAFC boss assured that the review of the revenue formula would be completed before the end of the year, then summitted to Buhari for transmission to the national assembly.

He said the review would focus only on vertical allocation, which covers allocation to the federal, state, and local governments.

“The revenue allocation formula review does not imply reduction. It does not imply reducing the cost of government. It is simply that we look at the responsibilities of each tier of government and what percentage of the federation revenue would be appropriate for the type of responsibility that tier of government has,” Mbam said.

“Because of what we have learnt, we have decided that we will handle first the vertical revenue allocation formula, which is sharing between states and federal government and local governments, not sharing among states or local governments, which would come as the second phase of this review. This is going to be less controversial, and we will achieve our goals.”

He noted that the consideration for the review was informed by the fact that the last general review of the formula was carried out 28 years ago in 1992.

He said the political structure of the country had since changed with the creation of six additional states in 1996, bringing the number of states to 36 while the number of LGAs also increased from 589 to 774.

He also said that there have been considerable changes arising from policy reforms that altered the relative share of responsibilities of the various spheres of government including controversies over the funding of primary education, primary health centers among others.

Mbam said the review was further necessitated by the inadequate and decaying infrastructure which had heightened widespread internal security challenges across the country, among others.

“In view of the above, the commission has commenced the review of the current vertical revenue sharing arrangement with a view to producing a fair, just, and equitable revenue sharing formula that will be acceptable to majority of Nigerians,” he said.

He said the constitution empowers the commission to review from time to time, the revenue allocation formula and principles in operation to ensure conformity with changing realities.

According to Mbam, the RMAFC had made three futile attempts in the past to review the revenue allocation formula but was unable to complete the process.

“The commission is highly determined to produce within a short time a revenue formula that will be fair, just and equitable to all tiers of government,” he added.