The Federal Government has started reviewing Nigeria’s revenue allocation formula to better reflect current economic realities.
The Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Bello Shehu, announced this during a press conference at the Yar’Adua Centre in Abuja.
He mentioned that the new formula might increase the share of funds going to state governments.
Currently, the revenue is shared as follows:
Federal Government – 52.68%
State Governments – 26.72%
Local Governments – 20.60%
According to sources, the new plan could raise the states’ share to between 30% and 40%. Stakeholders at the meeting supported giving more money to state and local governments, especially for infrastructure and electricity projects.
The Federal Government has also started giving 5% of tax revenues directly to states, based on new national tax laws.
Shehu explained that the goal is to create a fair and balanced formula based on the actual duties, needs, and abilities of the three tiers of government.
He emphasized that the review would be inclusive, based on data, and open. Consultations will be held with key groups, including the presidency, National Assembly, state governors, local government representatives, the judiciary, government agencies, civil society groups, traditional rulers, private sector players, and international partners.
The last full review of the revenue allocation formula was done in 1992. Since then, changes have only been made through executive orders.
The Commission aims to use solid research and international best practices in this new review process.
