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President Muhammadu Buhari of Nigeria

RMAFC Presents New Revenue  Formula To Buhari, Slashes FG’s Allocation

The Revenue Mobilisation, Allocation and Fiscal Commission, RMAFC, on Thursday proposed a 3.33% reduction in the statutory allocation to the Federal Government in a new vertical review of the sharing formula for the three tiers of government.

While it proposed reduction in the central government’s allocation, it however jerked up allocations to States and Local Government Areas by 3.07% and .44% respectively.

This was contained in a report presented to President Muhammadu Buhari on Thursday by the Chairman of the RMAFC, Mr Elias Mbam, at the Presidential Villa, Abuja.

The existing sharing formula allocates 52.68% to the FG while states and local government areas get 26.72% and 20.60% respectively.

In the new formula, the FG will take home 45.17% while States and LGAs will get 29.79% and 21.04% respectively.

Receiving the report, Buhari said he would await the outcome of the ongoing constitutional review process before presenting the report of the review of the vertical revenue allocation formula to the National Assembly as a Bill for enactment.

A statement by the president’s Special Adviser on Media and Publicity, Mr. Femi Adesina, quoted the president as saying, “Ordinarily, I would have gone ahead to table this report before the National Assembly as a Bill for enactment.

“However, since the review of the vertical revenue allocation formula is a function of the roles and responsibilities of the different tiers of government, I will await the final outcome of the constitutional review process, especially as some of the proposed amendments would have a bearing on the recommendations contained herein.

“Establishing local government as a tier of government and the associated abrogation of the state/local government account; moving airports; fingerprints, identification and criminal records from the exclusive legislative list to the concurrent legislative list, empowering the RMAFC to enforce compliance with remittance of accruals into and disbursement of revenue from the Federation Account as well as streamlining the procedure for reviewing the revenue allocation formula.”

The President assured members of the Commission that the FG would immediately subject the report to its internal review and approval processes, while awaiting finalization of the efforts by the National Assembly.

The president pointed out that, ‘‘I am aware that the present revenue allocation formula has not been reviewed since the last exercise carried out in 1992.

‘‘Considering the changing dynamics of our political-economy, such as Privatisation, Deregulation, funding arrangement of Primary Education, Primary Health Care and the growing clamour for decentralisation among others; it is necessary that we take another look at our Revenue Sharing Formula, especially the vertical aspects that relate to the tiers of government.

‘‘This becomes more compelling as we need to reduce our infrastructural deficit, make more resources available for tackling insecurity, confront climate change and its associated global warming and make life more meaningful for our rapid growing population.’’

President Buhari said as an advocate for grassroots development, he has always remained committed to ensuring that all tiers of Government are treated fairly, equally and justly in the sharing of national resources. 

‘‘I want to let you all know that I have keenly followed most of the discussions held in the geo-political consultative process and one thing that struck me clearly was the agreement that a review of our vertical revenue formula cannot and should not be an emotional or sentimental discussion and it cannot be done arbitrarily.

‘‘All over the world, revenue and resource allocation have always been a function of the level of responsibilities attached to the different components or tiers of government.

‘‘I am, therefore, happy to note that the discussions were held along these lines and rested squarely on roles and responsibilities as spelt out in the 1999 Constitution (as amended).

‘‘However, I also note that in reaching the final decisions at most of these engagements, not much emphasis was placed on the fact that the Second Schedule of the Nigerian constitution contains Sixty-Eight (68) items on the Exclusive Legislative List and the remaining Thirty (30) items on the Concurrent List requiring both the Federal and State Government to address’’.

President Buhari, therefore, declared that for the nation to have a lasting review of the present revenue allocation formula, there must first be an agreement on the responsibilities to be carried out by all the tiers of Government.

In particular, he noted that the proposal seeks a 3.33% reduction in the current FG allocation and on the other hand an increase of 3.07% and .44% for the States and LGs on the other hand.

He added that with regards to the Special Funds, the report by the RMAFC proposed an increase of .2% for the Federal Capital Territory (FCT) and a decrease of .38% for Development of Natural Resources.

The President recounted that the FG also made its input into the process of reviewing the vertical revenue allocation formula based on existing constitutional provisions for roles and responsibilities for the different tiers of government.

‘‘We must note the increasing visibility in Sub-national level responsibilities due to weaknesses at that level, for example: Primary Health Care; Basic Primary Education; Levels of insecurity, and; Increased remittances to State and Local Governments through the Value Added Tax sharing formula, where the Federal Government has only 15% and the States and Local Government share 50% and 35% respectively,’’ he said.

Also speaking, Mbam said the  review was guided ‘‘by the need for distributive justice, equity and fairness as enshrined in relevant Sections of the 1999 Constitution (as amended).’’

He added that the principles took into cognizance the indivisibility of the country, public opinion and weighted Constitutional responsibilities and 

In arriving at the new vertical revenue allocation formula, Mbam told the President the commission had wide consultation with major stakeholders, public hearing in all the geo-political zones, administered questionnaires and studied some other Federations with similar fiscal arrangements like Nigeria to draw useful lessons from their experiences.

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