Nigeria is preparing to review how money is shared between the federal, state, and local governments for the first time in three decades.
The Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Shehu, announced this on Monday at a press briefing in Abuja.
He said the review became urgent because the existing revenue allocation formula, last adjusted in 1992, no longer reflects the nation’s current realities.
Federal, States, and LGA’s Set for New Formula
Under the current structure, the Federal Government takes 52.6%, states receive 26.7%, and local governments are left with 20.6%. An additional 1% each goes to the Federal Capital Territory, the ecological fund, natural resources fund, and the stabilisation fund.
Shehu explained that Paragraph 32 (b), Part I of the Third Schedule of the 1999 Constitution (as amended) empowers RMAFC to “review, from time to time, the revenue allocation formulae and principles in operation to ensure conformity with changing realities.”
“Since that time, Nigeria has undergone profound transformations demographically, economically, and constitutionally,” he said.
He noted that responsibilities such as power generation, railways, and correctional services were recently moved from the federal to the concurrent list, placing new burdens on states.
Towards Equity and Fiscal Independence
Shehu said the review process would be broad-based, inclusive, and data-driven. It will engage the presidency, the National Assembly, state governors, ALGON, civil society, traditional rulers, and development partners.
“It will involve broad-based consultations with critical stakeholders… The commission is also committed to integrating cutting-edge research, empirical data, and international best practices in its analysis,” he added.
The RMAFC boss argued that a fairer formula would promote fiscal independence for states, help them meet service delivery obligations, and reduce over-reliance on Abuja.
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