Revenue allocation formula review begins Monday, says RMAFC

By Bassey Udo

The process to review the country’s existing revenue allocation formula will begin on Monday with a two-day public hearing, the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) announced on Sunday.

The Commission said the first of the series of nationwide public hearings and consultations would be held in Lagos for the South-West geo-political zone.

Participants in the Lagos meeting are expected to come from Lagos, Ekiti, Oyo, Ogun, Ondo and Osun States.

The full schedule of the public hearings released by the RMAFC showed the South South geo-political zone would take its turn next, with hearing slated for Port Harcourt in Rivers State between Thursday, October 7 and Friday, October 8.

Participants in the Port Harcourt hearing would be expected from Rivers, Akwa Ibom, Bayelsa, Cross River, Delta and Edo states.

For the South-East geo-political zone scheduled for Owerri, the Imo State capital between Ocrober 11 and 12, participants would be expected from Abia, Anambra, Ebonyi, Enugu and Imo states.

In the North-West geo-political zone scheduled for Kaduna in Kaduna State, participants would be expected from Jigawa, Kano, Katsina, Sokoto, Zamfara and Kaduna states.

Lokoja in Kogi State would host the public hearing for the North-Central geo-political zone between October 19 and 20, with participants expected from Benue, Kwara, Nasarawa, Niger and Plateau states.

In the North-East,  Commission said the  public hearing will hold in Gombe State on 21 and 22 October. Participants are expected from Adamawa, Bauchi, Borno, Taraba, and Yobe states.

The grand finale of the public hearings are scheduled for Abuja, the Federal Capital Territory, on October 25 and 26, with participants expected to include members of the State Executives, legislatures, judiciary, local government officials, civil society groups, organized labour, elder statesmen, traditional rulers and the general public.

The revenue mobilisation agency said during the public hearings Nigerians would be expected to make suggestions on the reviews they expect to the current revenue sharing formula.

The Commission was one of the 14 executive bodies in the 1999 constitution as amended mandated to review the revenue allocation formula and principles in operation from time to time.

Such reviews, the Commission said, are usually to ensure conformity with changing socio-economic and political realities, apart from monitoring appropriate revenue accruals to the Federation Account by the revenue generating agencies.

The Chairman of the Commission, Elias Mbam, said the review of the allocation formula would involve vertical and horizontal exercises.

The vertical formula review, the Chairman said would cover sharing of revenue between Federal, State and Local governments, while horizontal review would involve how revenues would be shared among states and local governments.

Backstory 
The proposal for the review of the revenue sharing formula for the three tiers of government has been a lingering issue in the country.

In 2019, Mbam said the review became necessary due to the current economic realities under which  the the federal government takes about 52.68 percent of total statutory revenue allocation every month, while the 36 state governments and the Federal Capital Territory get 26.72 percent and the 774 local governments share 20.60 percent.

Also, the nine oil producing states of the Niger Delta are allocated 13 percent of the revenue as derivation to compensate for ecological damage of oil production in the region.

This formula was approved during the Olusegun Obasanjo Administration.

Over the years, there have been agitations for a review of the formula to direct allocation of the revenues more towards grassroots development.

By implication, the agitators were demanding a reduction of the allocation to the Federal Government in favour of the States and Local Government councils.

In 2013, the RMAFC said it resolved to undertake a review to achieve a balanced development of the country.

Pursuant to that objective, the Commission said it embarked on a nationwide consultation in the 36 states, to solicit inputs in the decision-making process from notable persons, including traditional rulers on the issue.

By December 2014, the Commission said it developed a new revenue formula to submit to the government for consideration and approval.

More than seven years since the proposal was submitted, approval and implementation were stalled, resulting in the RMAFC constituting a standing committee to look at the proposal again to accommodate fresh concerns.

One of such concerns was the need to ensure diversification of the nation’s revenue base beyond the traditional areas of oil and gas, for a more sustainable growth and economic development.

The current review will focus only on the vertical allocation which covers allocation to the Federal, States and Local Governments and does not imply reduction in the cost of governance.

The Commission urged all  Nigerians to participate effectively in the review process and to submit five hard copies of their memoranda as well as soft copy of the proposed review to its office in Abuja or during the hearings across the zones.

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