FG Directs RMAFC to Finalize New Revenue Allocation Formula

The Federal Government has directed the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) to carry out a comprehensive due diligence process in developing a new and equitable revenue allocation formula for the country.

The directive was issued by the Secretary to the Government of the Federation (SGF), Senator George Akume, during a meeting with the management of the Commission led by its Chairman, Dr. Mohammed Bello Shehu, at the SGF’s office in Abuja on Monday.

According to a statement by Segun Imohiosen, Director of Information and Public Relations, Senator Akume expressed confidence in the Commission’s ability to deliver a robust and inclusive framework that reflects Nigeria’s current fiscal and economic realities.

“I am confident in the capacity of the management of the Commission to deliver on their mandate in developing a comprehensive revenue allocation formula, and I assure you of the readiness of my Office to give the necessary support to the realisation of the project,” Akume said.

The SGF stressed the importance of ensuring that the new formula prioritizes key Ministries, Departments, and Agencies (MDAs), especially the Ministry of Defence, given its critical role in safeguarding the nation’s peace and territorial sovereignty.

RMAFC Draft Formula Nears Completion

In his remarks, RMAFC Chairman Dr. Mohammed Bello Shehu disclosed that the Commission is at the final stages of preparing a draft of the new revenue allocation formula.

He explained that the draft would first be submitted to the SGF’s office for review and inputs before being transmitted to the National Assembly for legislative approval.

The initiative, he said, is part of broader efforts to reform Nigeria’s fiscal framework and ensure a more balanced distribution of resources across federal, state, and local governments.

Nigeria’s current revenue allocation formula has been in place for decades despite evolving economic, demographic, and security challenges. The anticipated review is expected to close funding gaps across key sectors and enhance public service delivery, particularly in national security, infrastructure, and social welfare.

Current Revenue Sharing Formula

At present, revenue from the Federation Account is shared as follows:

• Federal Government: 52.68%
• State Governments: 26.72%
• Local Governments: 20.60%

However, the proposed new arrangement is expected to reduce the federal government’s share while boosting allocations to states and local governments to improve grassroots development and service delivery.

What You Should Know

The move to review Nigeria’s revenue-sharing formula has been pending for years.

• In December 2023, RMAFC announced that it planned to begin implementing a new formula by the first quarter of 2024.
• At the time, Dr. Shehu told the House of Representatives Committee on Finance that the Commission would forward the new framework to the President before its transmission to the National Assembly.
• Despite that pledge, the implementation has yet to materialize, leaving states and local governments pressing for a more equitable share of national resources.

The latest directive from the SGF is seen as a renewed push by the federal government to bring the long-delayed review to fruition.