RMFAC, FRC chairmen seek fiscal autonomy for sub-nationals

The Chairman of the Revenue Mobilization Allocation and Fiscal Commission (RMFAC), Dr. Mohammed Shehu, and his Fiscal Responsibility Commission (FRC) counterpart, Victor Muruako, have said that Nigeria will develop faster if states and local government areas have financial autonomy.

Presenting a paper titled, ‘Rethinking Nigeria’s Revenue Allocation Formula: Implications for Fiscal Federalism and Sustainable Development’, at the 5th National Treasury Workshop, which ended on Wednesday in Abuja, Dr. Shehu said there is over-centralization of the country’s resources, noting that such a situation weakens the fiscal autonomy of sub-nationals.

He said, “The Federal Government receives the largest share of the revenue, thus limiting the fiscal independence of sub-nationals. Allocation to local governments is not only insufficient for grassroots development, but they also lack direct access to funds.”

He said there is a need to review the current revenue allocation formula because it has proven inadequate in addressing the country’s evolving economic and developmental challenges.

The RMAFC boss stated that a revised formula is necessary to ensure a more equitable, efficient, and sustainable distribution of resources, foster fiscal federalism, enhance sub-national development, and reduce regional disparity.

While acknowledging that there have been several unsuccessful attempts in the past to review the revenue allocation formula, he emphasized that the revised formula should ensure greater financial autonomy for states and local governments, reducing their over-reliance on federal allocations. He also encouraged them to develop alternative revenue sources such as agriculture, solid minerals, and tech-driven enterprises.

He further noted that strengthening fiscal decentralization will promote accountability and responsiveness in governance, ensuring that resources are efficiently utilized to meet the needs of citizens at the grassroots level, thereby enhancing sub-national development.

According to him, sub-national governments require increased funding to drive critical development sectors such as infrastructure, education, healthcare, and job creation.

“A revised formula should prioritize needs-based allocations, ensuring that states and local governments receive funding commensurate with their developmental challenges and expenditure responsibilities,” he added.

In his contribution to the topic, the Chairman of FRC, Muruako, said that increased revenue allocation to local government areas and making direct financial resources available to them would have a more tangible impact on citizens.

While calling for fiscal sustainability from the federal government down to the local government level, the FRC boss also urged local governments to engage with their communities to understand their needs before drafting budgets, as this would help drive internally generated revenue (IGR).

He echoed the need to revise the revenue allocation formula to enhance fiscal federalism and promote development at sub-national levels.