RMAFC Begins Review of Revenue Sharing Formula Among Federal, State, and Local Governments

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has officially commenced the process of reviewing the Revenue Allocation Formula (RAF), which determines how funds are distributed among the federal, state, and local governments.

Chairman of the Commission, Mohammed Shehu, announced this at a press conference in Abuja on Monday, explaining that the exercise was overdue given Nigeria’s current economic realities. He noted that the last review took place in 1992, more than three decades ago.

According to him, the aim of the review is to produce a “fair, just, and equitable revenue-sharing formula that reflected the current responsibilities, needs, and capacities of the three tiers of governments in line with the constitutional roles.”

Presently, the formula allocates 52.6 percent of federally collected revenue to the Federal Government, 26.7 percent to states, and 20.6 percent to local governments. In addition, one percent each is reserved for the Federal Capital Territory, ecological fund, natural resources, and the stabilisation fund.

Quoting the 1999 Constitution, Shehu recalled Paragraph 32 (b), Part I of the Third Schedule, which empowers RMAFC to “review, from time to time, the revenue allocation formulae and principles in operation to ensure conformity with changing realities.”

He stressed: “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.”

Shehu highlighted that amendments made by the Ninth National Assembly had transferred new responsibilities to state governments—such as power generation and distribution, railways, and correctional centres. These, he explained, created additional financial and administrative burdens at the sub-national level, necessitating a reevaluation of Nigeria’s fiscal federalism.

He argued that a new formula was needed “to foster economic growth in individual states, enabling them to become independent from the central government and ensuring equity, responsiveness, and sustainability.”

The RMAFC chairman assured that the process would be “inclusive, data-driven, and transparent,” stressing that the commission would examine needs, service delivery obligations, fiscal performance, and developmental disparities across the three tiers of government.

“It will involve broad-based consultations with critical stakeholders, including the presidency, national assembly, state governors, ALGON, the judiciary, MDAs, 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,” Shehu said.