Buhari Receives Proposed Vertical Revenue Allocation Formula Review Report, NASS To Get Report Later

The Revenue Mobilization Allocation and Fiscal Commission have finally presented the report of the review of the vertical revenue allocation formula to President Muhammadu Buhari on Thursday, April 07, 2022.

Last year, the Chairman of the commission, Elias Mbam, said the report would be presented to the president by December 31, 2021. However, the commission failed to meet this deadline.

The new formula proposes 45.17% for FG, 29.79% for states, 21.04% for LGAs

The Chairman of the commission announced on Thursday that the proposed vertical revenue allocation formula advised 45.17 percent for the Federal Government, 29.79 percent for state governments, and 21.04 percent for the local governments.

Under Special Funds, he said the report by the commission recommended 1.0 percent for Ecology, 0.5 percent for Stabilisation, 1.3 percent for Development of Natural Resources, and 1.2 percent for the FCT.

The old revenue formula was designed during the tenure of former President Olusegun Obasanjo.

Under this new formula, the Federal Government gets 52.68 percent, the 36 states get 26.72 percent while the 774 local government areas in the country share 20.60 percent every month.

The proposed formula, therefore, suggested an upward review for states and local governments, but a downward review for the Federal Government.

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In arriving at the new vertical revenue allocation formula, Mbam told the President the commission had consulted widely with major stakeholders, public hearings in all the geo-political zones, administered questionnaires, and studied some other federations with similar fiscal arrangements like Nigeria to draw useful lessons from their experiences.

He added that literature reviews were conducted on revenue allocation formula in Nigeria dating back to the pre-independence period while the commission received memoranda from the public sectors, individuals, and private institutions across the country.

Explaining the major reasons for the exercise, Mbam noted that since the last review was conducted in 1992, 29 years ago, the political structure of the country had changed with the creation of six additional states in 1996, which brought the number of states to 36.

Correspondingly, he said, the number of local governments councils also increased from 589 to 774.

‘‘There have been considerable changes arising from the policy reforms that altered the relative share of responsibilities of the various tiers of Government such as deregulation, privatization and the lingering controversies over funding of primary education, primary healthcare,’’  he said.

I’ll await the constitution review process—Buhari

President Muhammadu Buhari on Thursday in Abuja said he would await the final outcome of the constitutional review process before presenting the report of the review of the vertical revenue allocation formula to the National Assembly as a bill for enactment.

The President stated this while receiving the report by the RMAFC, led by Elias Mbam.

According to a statement signed on Thursday by his Senior Special Assistant on Media and Publicity, Femi Adesina, Buhari said ‘‘Ordinarily, I would have gone ahead to table this 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.”

The President who lamented that the present revenue allocation formula has not been reviewed since the last exercise carried out in 1992, said ‘‘Considering the changing dynamics of our political-economy, such as privatization, deregulation, funding arrangement of primary education, Primary Health Care and the growing clamour for decentralization 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 available for tackling insecurity, confront climate change and its associated global warming and make life more meaningful for our rapidly growing population.’’

The President assured members of the commission that the Federal Government would immediately subject the report to its internal review and approval processes while awaiting the finaliSation of the efforts by the National Assembly.

He commended the RMAFC for a job painstakingly done, pledging his unwavering commitment and support to them in carrying out their constitutional mandates.

In his remarks, the Secretary to the Government of the Federation, Boss Mustapha, said the RMAFC followed due process in undertaking the exercise and sought the opinion of the Federal Government before finalizing the report.

Mustapha said that it was in four volumes, including a summary in the main report.

On his part, Mbam said the leading philosophy behind the proposed review was guided ‘‘by the need for distributive justice, equity and fairness as enshrined in relevant Sections of the 1999 Constitution (as amended).’’