The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has formally initiated the process of reviewing Nigeria’s Revenue Allocation Formula (RAF) the framework that determines how public funds are distributed among the federal, state, and local governments.
Announcing the development at a news conference in Abuja on Monday, RMAFC Chairman Mohammed Shehu said the current revenue-sharing model, last reviewed in 1992, no longer reflects the country’s evolving economic and constitutional landscape.
“This review has become necessary in light of Nigeria’s changing socio-economic and political conditions over the past three decades,” Shehu stated.
Current Revenue Sharing Breakdown
Under the existing formula:
- Federal Government: 52.6%
- State Governments: 26.7%
- Local Governments: 20.6%
Additionally, 1% each is allocated to the Federal Capital Territory (FCT), Ecological Fund, Natural Resources, and the Stabilisation Fund through vertical revenue distribution.
Seeking Fairness and Equity
Shehu said the goal of the review is to craft a “fair, just, and equitable” formula that matches the functions, needs, and financial capacities of each tier of government, in line with their constitutional responsibilities.
He cited Paragraph 32 (b), Part I, Third Schedule of the 1999 Constitution (as amended), which empowers RMAFC to periodically review revenue-sharing principles to reflect current realities.
“Since the last review, Nigeria has experienced significant demographic, economic, and constitutional transformations,” he said.
One of the major catalysts for the review, according to Shehu, is the recent constitutional amendment by the Ninth National Assembly, which transferred responsibilities such as electricity generation, railways, and correctional services from the Exclusive Legislative List to the Concurrent List. These shifts have placed greater financial and administrative burdens on state governments, necessitating a reexamination of how public revenues are distributed.
An Inclusive and Transparent Process
Shehu assured that the commission would pursue a data-driven, inclusive, and transparent approach, taking into account:
- Service delivery obligations
- Fiscal performance
- Developmental gaps
- Equity and sustainability
“We will engage extensively with stakeholders including the Presidency, National Assembly, state governors, ALGON, judiciary, MDAs, civil society, traditional institutions, private sector actors, and development partners,” he said.
To guide its recommendations, the RMAFC also plans to integrate international best practices, empirical data, and advanced research methodologies.
Toward Fiscal Federalism and Economic Autonomy
Ultimately, Shehu noted, the commission aims to strengthen Nigeria’s fiscal federalism, encouraging states to become more economically autonomous and reducing their overdependence on the federal government.
“This process is about building a more responsive, equitable, and sustainable fiscal framework that empowers all tiers of government to deliver effectively to the Nigerian people.”
