Nigeria is ready for a thorough examination of its revenue allocation structure after more than three decades of working with an old system.
Under the guidance of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), the exercise is intended to alter budgetary federalism and ensure justice in resource distribution among the three tiers of government.
The last large evaluation of the recipe was carried out in 1992, with only slight changes added in 2002. More responsibilities have been transferred to state governments as a result of major governance changes since then, particularly constitutional amendments passed by the 9th National Assembly. These amendments gave the states authority over industries including electricity, railroads, and correctional facilities, hence increasing their fiscal responsibilities.
Nigeria’s federally collected revenue is presently split as follows: 52.68 percent to the Federal Government, 26.72 percent to state governments, and 20.60 percent to local governments. Of the federal share, 4.18 percent is next distributed to special funds including ecological issues, the Federal Capital Territory, natural resources, and stabilizing initiatives.
Critics have long asserted that given the increasing necessity for states to support important infrastructure and social services, this structure does not capture current realities.
The News Chronicle understands that the review is about creating a framework supporting accountability, equity, and sustainability, not only about redistribution. Sources close to the Commission say that empirical evidence and worldwide best practices will direct the process, hence guaranteeing that the revised formula fits current economic circumstances.
Once the process is finished, this implies that states and municipal authorities, who frequently suffer the brunt of service delivery, may get more financial support.
Particularly if it increases the financial independence of subnational governments, analysts think this review might be a turning point in Nigeria’s financial system. Giving states more funds to oversee devolved sectors might help to lessen reliance on the federal government and make room for greater government innovation.
President Bola Tinubu has also received thanks from the RMAFC for granting it administrative and financial independence, a move said to be vital for the Commission’s capacity to conduct this work autonomously. Observers contend this change has placed the RMAFC as a more reliable and efficient entity able to provide a revenue-sharing plan that accurately reflects Nigeria’s current and future demands.
