The Revenue Mobilisation, Allocation and Fiscal Commission says it will be ready to present a new revenue sharing formula to the President, Major General Muhammadu Buhari (retd.), for onward transmission to the National Assembly by December.
It said the ongoing consultation and sensitisation across the country were aimed at avoiding past pitfalls that made past attempts to review the formula unsuccessful.
Confirming the readiness of the commission to present the new revenue formula, RMAFC chairman, Elias Mbam, in a telephone interview blamed logistics for the failure of the commission to fulfill similar promises in the past.
Revenue sharing formula which has remained a controversial subject in Nigeria even before independence in 1960 refers to the proportion of resources accruing to the federation that goes to each of the components of the nation.
It also defines the proportion of resources that must be retained in the territories where they are generated as well as what goes to the agencies of government that collect the revenues on behalf of the federation.
The current revenue formula was designed during the tenure of former president, Olusegun Obasanjo.
Under this formula, the Federal Government gets 52.68 per cent, the 36 states share 26.72 per cent while the 774 local government areas in the country share 20.60 per cent every month.
However, there have been calls and attempts to change this formula to ensure equitable distribution of the accrued revenue.
The current plan to review the formula would not be the first time the RMAFC had undertaken to tinker with the country’s revenue-sharing arrangement.
In 2013, the commission embarked on a nationwide consultation with the 36 states and met with notable figures with a plan to review the formula.
Investigation showed that the politics and the eventual consequence of the Federal Government losing its fat allocation of the federation account are responsible for the delay in completing the process for the implementation of the new revenue formula.
Former Chairman, Public Affairs and Communication Committee at RMAFC, Ambassador Zubairu Dada, had in a statement on December 19, 2013 said the draft new revenue formula was ready and would be forwarded to former president, Dr. Goodluck Jonathan, in accordance with the constitution.
It is the responsibility of the president to lay the new formula before the National Assembly for necessary legislation.
Dada said members of the commission unanimously adopted the draft report following a two-week retreat at Tinapa, Cross River State where all the submissions, relevant documents and inputs from stakeholders were analysed and considered.
The commissioners had converged from 23rd November to 7th December on Tinapa Business Resort and Hotel, Calabar, Cross River State Capital where they held a two-week retreat to brainstorm on the Revenue Allocation Formula Draft Report.
Investigation shows that Jonathan did not make any attempt to table the draft revenue formula before the National Assembly before his tenure elapsed on May 29, 2015.
When Buhari assumed office on May 29, 2015, there was hope that the draft document would receive a fresh breath of life given that many state governments especially in the states controlled by the All Progressive Congress had vigorously advocated for the adoption of a new formula to help the states meet their financial challenges.
While the debate on a new national minimum wage lasted in 2011, many state governors had hinged their capacity to comply with the new minimum wage on a reviewed revenue sharing formula that favoured the states.
However, after the APC won election at the federal level, many of the states that had kept the Federal Government on its toes for a new formula had kept quiet.
As Jonathan, Buhari also tactically declined to receive the new formula from RMAFC.
In July 2017, the Senate asked the commission to review the current revenue sharing formula, stating that the current formula did not reflect the current economic realities in the country and that it favoured the Federal Government as the states and the local governments were struggling to survive economically.
In November 2020, the House of Representatives during a budget defence session asked the commission to create a new revenue sharing formula that would put more resources at the disposal of state and local governments.
However, still in November last year, the government blocked the Commission’s proposal on revenue formula and salary review.
Despite the fact that previous attempts to review the current formula have failed, the commission has established a new committee to undertake a fresh review of the formula, with sensitisation efforts ongoing across the country.
On how the commission planned to overcome past challenges, Mbam told one of our correspondents that the commission had intensified consultation and sensitisation to ensure that more Nigerians were aware and involved in the review process.
He said, “What the commission is doing now is that we have intensified consultation and sensitisation. I had a meeting and briefing with the House of Representatives leadership, the Speaker, Deputy Speaker and all the leadership of the house.
“We also have programmed to do the same with the Senate. Even at the subnational level, we are making sure that we carry along all arms of government – the judiciary, the executive and the legislator.
“So, we are doing extensive consultation. We have gone around the local governments and states to sensitise them, and now we are doing a zonal public hearing.
“We want Nigerians to buy into it, to be part of it because at times, the lack of information may bring misunderstanding of an issue.
“So, we want them to be part of what we are doing. Make your input down so that we will carry everybody along and at the end, we will have something that is fair to everyone.”
According to the commission, the new committee should submit a new formula for vertical allocation to the president, Major General Muhammadu Buhari (retd.), by the end of the year.
Speaking on this, the RMAFC chairman said the commission still planned to stick with the deadline for submitting the new formula to the President.
Mbam said, “It is in our plan to stick with the deadline. However, nothing is cast on stone. We assume that all things will be equal.
“If something happens that is above our control, there is nothing we can do. But the programme we are running is to conclude by December 31. December is to conclude our own side.
“There are three stages of reviewing the formula. When we finish our own, we make the presentation to the president; the president will table it to the national assembly. What we are saying is that at the end of the year, ours should be ready for presentation to the president.”
APGA, ADP, others call for favourable revenue allocation formula for states
Opposition political parties who spoke to our correspondents canvassed for a revenue allocation formula which will favour states more than what obtained now.
In separate telephone interviews with The PUNCH, the opposition political parties faulted the inability of the All Progressives Congress and the Peoples Democratic Party administrations before it, for failing to strengthen the states.
National Publicity Secretary of the All Progressives Grand Alliance, Tex Okechukwu, said states would function better with the states getting more than the Federal Government.
He said, “If you ask me, we should have a confederation instead of this unitary system of government that we are having today.
“The (revenue allocation) system we are operating now has failed, we need to revisit it to enable the states to perform like Anambra State is performing with APGA on the saddle.
“I will suggest a 50, 35 and 15 per cent sharing formula in favour of the states, Federal Government and Local Governments in that order.”
Okechukwu further argued that the current system was obviously not working.
Speaking in a similar vein, the National Chairman of the Action Democratic Congress, Alhaji Yabagi Sani, said, whatever suggestions any person or group of persons have should be channeled to the National Assembly.
Sani said, “I think we should approach the National Assembly to amend the Constitution to allocate more revenue to the states instead of the current system which favours the Federal Government.
“The states should be given more money as well as responsibilities to reduce this undue attention to the centre.”
Also, a former Chairman the Inter-Party Advisory Committee, Peter Ameh, said Nigerians would benefit better with a revenue allocation formula which was more favourable to the states.
He said before now, “We had a system which encouraged the federating units to produce and pay royalties to the federation account.
“The current system encourages laziness because some governors simply fold their hands and wait for the end of the month to come to Abuja to share.”
CSOs speak on planned review
The Executive Director, Civil Society Legislative Advocacy Centre, Auwal Musa, described the review as long overdue especially in the light of recent agitations for a review by sub-national governments towards fiscal federalism.
“While revenue accruing over time to the government has increased in absolute terms, their revenue profile depends largely on statutory allocations and the sharing formula while the performance of internally generated revenue has remained unsatisfactory.
“It is worthy to note that government resources would be allocated more efficiently if responsibility for each type of public expenditure were given to the level of government that most closely represents the beneficiaries of the corresponding outlays,” he said.
Towards ensuring that both vertical and horizontal revenue allocation in Nigeria achieves its purpose of efficiency and equity, he said, “At the vertical level, states and local government should be given a higher share of the revenue given that they are closer to the citizens in terms of the basic needs needed by the citizens and most Nigerians live in the rural areas where amenities are not available.
“There is absolute need to devolve more financial resources from the Federal Government to local governments given the fact that the states and local governments are more grassroots oriented and the vast majority of Nigerians live in the rural areas where basic amenities are lacking.
“At the horizontal level, the review should prioritise the derivation principle over all other principles to truly reflect the contribution of more resourceful governments to the central purse both in the spirit of fairness and as impetus to stimulate domestic resource mobilisation.
“The review should base current revenue allocation formula for funding according to functions each tier of government performs.
“This is to ensure that the tiers of government are able to carry out expenditure functions within their jurisdiction and ultimately improve the economic growth in the country.
“Lastly, the Federal Government should grant autonomy to states and Local Governments in terms of both generation and spending of revenue in all its entirety with only agreed or minimal percentage (e.g.10 per cent) sent to central pool.
“This will resolve the issue of items on exclusive or concurrent lists in the constitution currently undergoing legislative amendment and also solve the problem of agitations, resource control and disunity currently threatening sustainable national development in Nigeria.
“The dependence of the local government on the states and federal government allocation has led to its inability to positively affect the economic growth in the country. “Hence, the local government alongside the state government should be given autonomy and efforts should be made to boost the internal revenue accruing to the local and state governments.”
Also, the Executive Director, Due Process Advocates, Emeka Ugwuonye, said revenue allocation must reflect the constitutional structures of Nigeria as well as the economic realities of the country.
“Bear in mind that the core of revenue allocation is justice and equity and the perceived lack of it has been one of the greatest causes of tension in this country,” he said.
He added that any formula chosen must be rational and just.
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