Business - Business & Economy - News - June 28, 2021

Revenue mobilisation agency set to fully commence allocation formula review next month

Commission expects the review process to be concluded before the end of December 2021.

MEDIATRACNET

The process to fully kickstart the review of the country’s revenue allocation would begin next month, the Chairman, Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Elias Mbam, has said.
Mbam told members of the National Assembly Service Commission led by Ahmed Khadi Amshi who visited him in his office in Abuja on Monday all arrangements have been concluded towards the exercise.
The Chairman said the review of the formula was targeted at ensuring equitable distribution of the accrued revenue into the Federation Account among the three tiers of government, namely federal, states and local government councils.
He said the Commission expects the review process to be concluded before the end of December 2021.
Reminding his guests about its mandate, Mbam said RMAFC was one of the 14 executive bodies contained in the 1999 constitution as amended saddled with the statutory responsibility of reviewing the Revenue Allocation Formula and principles in operation from time to time.
Such reviews, he said, are usually to ensure conformity with changing socio-economic and political realities, alongside monitoring appropriate revenue accruals to the Federation Account by the revenue generating agencies.
Also, the Chairman announced that the review of remuneration packages of political and Judicial office holders would equally take off as soon, following the disbursement of funds by the Federal government for the exercise.

Vertical and horizontal reviews
Giving further details of how the Commission would go about the review, Mbam said the exercise would concentrate first on the vertical formula, which has to do with sharing of revenue between Federal, State and Local governments.
This, he said, would be followed by the horizontal review of the formula, which would involve how revenues would be shared among states and local governments.
The review of the remuneration for judicial and executive office holders in the Federation, he explained, would subjected to further legislation by the National and State Assemblies before the final approval.
He said the review of such remuneration packages by the various Houses of Assembly would however be based on what the RMAFC recommended in line with ghe provisions of the constitution.
He said RMAFC’s determination of the remuneration package for the legislatures at Federal, State and Local governments was final. 
Earlier, Amshi thanked the RMAFC Chairman for hosting him and his team and pledge the collaboration of the National Assembly Commission in the area of manpower development considering that RMAFC has the same organizational structure as the National Assembly.   
Amshi appreciated RMAFC in its mandate of boosting the revenue generation of the nation and its determination to ensure equity in the distribution of allocations to the three tiers of government.

Backstory 
The proposal for the review of the revenue sharing formula for the three tiers of government has been a lingering issue.
In 2019, Mbam said the review became necessary due to the current economic realities.
Under the existing revenue sharing formula, 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 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 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.
Almost 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.

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