States To Get More Funds As FG Begins Review Of Revenue Allocation Formula

By Ayodele Oni

Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Bello Shehu has announced that the process of reviewing the nation’s revenue allocation formula to meet current realities has commenced.

He revealed the commencement of the review process at a press conference  in Abuja on Monday.

This is coming almost 13 years after a review of the revenue sharing firmilar wS carried out.

The RMAFC chairman explained that the aim of the review was to produce a fair, just, and equitable revenue-sharing formula that reflects the current responsibilities, needs, and capacities of the three tiers of government  Federal, State, and Local Governments in line with the constitutional roles.

Dr Shehu said the Commission will carefully assess the needs, service delivery obligations, fiscal performance, and developmental disparities.

“Let me state clearly that this review will be inclusive, data-driven, 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 last review of the Revenue Allocation Formula was carried out in 1992.

However, there were several executive orders from May 2002 to date to modify the formula to reflect emerging socio economic realities.

The Commission restated its commitment to integrating cutting-edge research, empirical data, and international practices in its analysis.

There are indications that the new formula would give more funds to the states of the federation.

Sources in the commission disclosed that government was planning to increase total allocation to the states to between 30 and 40 percent from the current formula, which allocates 52.68%, 26.72% and 20.60% to the Federal, State and Local Governments, respectively.

Stakeholders at the briefing urged the government to push more resources to the sub-national, especially for infrastructure projects, including provision of electricity.

The Federal Government is already relinquishing five percent of its tax revenue to the states as contained in the recently signed national tax laws.