The Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Shehu, has announced the start of a fresh review of the Revenue Allocation Formula (RAF) between the federal, state, and local governments, marking the first major effort in more than thirty years to update how national income is shared.
Speaking at a press briefing in Abuja on Monday, Shehu said the exercise had become inevitable given the economic changes that have taken place since the last review in 1992. He explained that the process is intended to deliver a fair, just, and balanced revenue-sharing structure that reflects the responsibilities, needs, and financial capacity of the three tiers of government as defined by the Constitution.
At present, the Federal Government takes 52.6 per cent of nationally collected revenue, states receive 26.7 per cent, and local governments are allocated 20.6 per cent. A further one per cent each is channelled to the Federal Capital Territory, the ecological fund, natural resources, and the stabilisation fund.
Citing Paragraph 32 (b), Part I of the Third Schedule of the 1999 Constitution (as amended), Shehu reminded stakeholders that the RMAFC is mandated to review the revenue-sharing formula periodically to ensure it aligns with changing circumstances.
“In line with this constitutional responsibility and in response to the evolving socio-economic, political, and fiscal realities of our nation, the commission has resolved to initiate the process of reviewing the revenue allocation formula to reflect emerging socio-economic realities. As you may be aware, since that time, Nigeria has undergone profound transformations demographically, economically, and constitutionally,” he said.
Shehu pointed to the recent constitutional amendments by the Ninth National Assembly which transferred responsibilities such as electricity generation, transmission and distribution, as well as railways and correctional centres, from the Exclusive Legislative List to the Concurrent List. According to him, this development has increased both financial and administrative obligations for state governments.
He argued that these shifts made it crucial to revisit the framework of fiscal federalism to strengthen state economies, encourage self-reliance, and promote fairness and sustainability across the federation.
The RMAFC chairman pledged that the review would be rigorous and inclusive, taking into account service delivery obligations, fiscal performance, developmental disparities, and the specific needs of each tier of government. He noted that the commission will rely on broad consultations and credible data in shaping its recommendations.
“It will involve extensive engagement with critical stakeholders, including the presidency, the national assembly, state governors, ALGON, the judiciary, ministries, departments and agencies, civil society organisations, traditional rulers, the organised private sector, and development partners. The commission is also committed to integrating cutting-edge research, empirical data, and international best practices in its analysis,” he said.
