The Federal Government has set in motion a long-awaited review of Nigeria’s revenue allocation formula, 33 years after the last major overhaul.
Mohammed Shehu, Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), announced the move on Monday in Abuja, saying the exercise would “reshape fiscal federalism” to reflect the expanded responsibilities of states and local governments.
The last full review took place in 1992, with minor executive adjustments in 2002. Shehu said the formula had since become obsolete, particularly following constitutional amendments by the 9th National Assembly which devolved powers over electricity, railways and correctional centres to the states.
“These amendments have placed enormous burdens on state governments,” he said. “It has therefore become essential to re-evaluate our fiscal federalism to ensure equity, responsiveness and sustainability.”
At present, federally collected revenue is shared 52.68% to the Federal Government, 26.72% to states and 20.60% to local governments. From the federal share, 4.18% is reserved for special funds, including 1% for the Federal Capital Territory, 1% for ecological challenges, 1.68% for natural resources and 0.5% for stabilisation.
Shehu pledged an “inclusive, data-driven and transparent” review, with consultations spanning the Presidency, National Assembly, governors, local government councils, the judiciary, ministries, civil society, traditional rulers, the private sector and development partners.
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“We are committed to integrating cutting-edge research, empirical data and international best practice. This is a historic opportunity to build a more resilient and equitable fiscal system for Nigeria, and we shall not fail,” he said.
He commended President Bola Tinubu for granting the Commission financial and administrative autonomy under its new enabling law, saying the reform had repositioned the RMAFC as a truly federal body.
Experts at the launch stressed that accountability must accompany any redistribution of funds. Financial analyst Thomas Ndengbepe urged that additional revenues for states be ring-fenced for infrastructure, while Auwal Rafsanjani of CISLAC warned that without local government reforms, grassroots development would remain elusive.
Governance expert Husseini Abdu cautioned against legislators diverting federal allocations into constituency projects, calling for greater inclusiveness and transparency in the new formula.
Debate also resurfaced on whether RMAFC’s proposals should go directly to the National Assembly rather than first through the Presidency, a process that has delayed previous reforms.
Shehu assured Nigerians the review would be completed before the end of the year, subject to consultations and legislative approval.
“This review is not just about figures,” he said. “It is about safeguarding Nigeria’s federal system, ensuring fairness and strengthening the capacity of every tier of government to deliver development.”
