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Proposed revenue sharing formula

By Editorial Board
22 May 2022   |   2:56 am
A bid to rejig the Revenue Allocation Formula for the country should be seen as an initial step to liberalising the politically stifling structure of the polity that has seen the component parts

Chairman, Revenue Allocation, Mobilisation, and Fiscal Commission (RAMFC) Engr. Elias Mbam<br />

A bid to rejig the Revenue Allocation Formula for the country should be seen as an initial step to liberalising the politically stifling structure of the polity that has seen the component parts struggling for a small percentage of money generated; while the federal government at the centre appropriates the bulk of the money to itself.

The idea of the federal government controlling more money, sometimes than all the 36 states combined, has not portrayed a good omen for the development of the country along the federation line to which it professed.

Rather, it has saddled the government at the centre with too much responsibility, as expressed in the Exclusive Legislative List in the 1999 Constitution, the direct result of which is to curtail the efficiency of the government’s operation at that level, while also restricting the potential of the states to develop. When compared with the scheme of things prior to 1966 when the military forcefully took over power, the country’s upward movement has been epileptic.

The states lost their steam to engage in healthy competition among themselves for development. Rather, they feel no remorse or anything unhealthy to go cap in hand with the federal government at the slightest of excuses.

Recently, the Revenue Allocation, Mobilisation, and Fiscal Commission (RAMFC) proposed a 3.3 percent cut in the Federal Government (FG) allocation. States and councils are to earn more from the Consolidated Revenue Fund should the National Assembly ratify the new sharing formula of the federation account. The Federal Government will give up 3.3 percent so as to shore up the accruing accounts of states and local government councils. This will be the first time in 30 years that the revenue formula will be adjusted. The subsisting formula was enacted in 1992.

When the RAMFC submitted the sharing proposal to President Muhammadu Buhari at the Presidential Villa recently, the president said through his Special Adviser on Media and Publicity Femi Adesina that ordinarily, he would have gone ahead to table the report before the National Assembly as a bill for enactment.

“However, since the review of the vertical revenue allocation formula is a function of the roles and responsibilities of the different tiers of government, I will await the final outcome of the Constitutional Review process, especially as some of the proposed amendments would have a bearing on the recommendations contained herein.”

In the proposal, the RAMFC recommended that the state’s monthly allocation be increased by 3.07 percent. The councils will have their 20.60 percent share increased by 0.44 percent. The 3.07 percent and 0.44 percent will be sliced from FG’s 52.68 percent.

Thus, the federal government is now expected to take 45.17 percent, states will share 29.79 percent while the 774 councils will have 21.05 percent. The RAMFC Chairman, Elias Mbam presented the report.

The President listed some of the proposed amendments in the report as follows: Establishing local government as a tier of government and the associated abrogation of the state/local government account; moving airports; fingerprints identification and criminal records from the exclusive legislative list to the concurrent legislative list; Empowering the RAMFC to enforce compliance with remittance of accruals into and disbursement of revenue from the federation account; and streamlining the procedure for reviewing the revenue allocation formula.

Buhari said further: “Considering the changing dynamics of our political economy, such as privatisation, deregulation, funding arrangement of primary education, primary health care, and the growing clamour for decentralisation among others, it is necessary that we take another look at our revenue sharing formula, especially the vertical aspects that relate to the tiers of government.

“This becomes more compelling as we need to reduce our infrastructural deficit, make more resources more available for tackling insecurity, confront climate change and its associated global warming and make life more meaningful for our rapidly growing population.”

Moreover, Buhari stated that as an advocate of grassroots development, he had always remained committed to ensuring that all tiers of government were treated fairly, equally and justly in the sharing of national resources.” Thereafter, Buhari declared that for the nation to have a lasting review of the present revenue allocation formula, there must first be an agreement on the responsibilities to be carried out by all the tiers of government.

Overall, the proposed new formula is desirable as a step towards the country realising the status of a true federation. However, President Buhari’s decision to await the outcome of the constitutional review before seeking its implementation is unlikely to see the proposal coming to fruition, given that the review is taking an eternity.

The review actually started during the tenure of President Obasanjo and has remained in the confines of the National Assembly since then with no assurance of being concluded anytime soon. Moreover, the preponderance of opinion seems to favour the production of an entirely new constitution rather than reworking the 1999 document that is afflicted with fundamental flaws.

vertheless, in view of the fact that the current revenue allocation formula is based on the unitary form of government in the federation of Nigeria, the proposed review should be on the basis that Nigeria is a federation. Therefore, the review should aim at drastically reducing the bohemian powers and finance of the federal government and buoying up those of the states, in line with, or close to the formula (states 60: federal 40) in the Independence Constitution of 1960 and the Republican Constitution of 1963. A return to true federalism is the answer to the country’s insecurity and poverty; similarly, a return to true federalism is the answer to Nigeria’s revenue allocation formula too.

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