Time to adopt the federal revenue sharing formula

Recently, the Revenue Allocation, Mobilisation, and Fiscal Commission (RAMFC) proposed a 3.3 percent cut in the Federal Government (FG) allocation: states and councils are to earn more from the Consolidated Revenue Fund should the National Assembly ratify the new sharing formula of the federation account. The FG will lose 3.3 percent so as to shore up the accruing accounts of states and local government councils. This will be the first time in 30 years that the revenue formula will be adjusted. The subsisting formula was enacted in 1992. The RAMFC submitted the sharing proposal to President Mohammed Buhari at the Aso Presidential Villa recently. President Buhari promised to send the proposal to Parliament for enactment as soon as possible. In the proposal, the RAMFC recommended that the states monthly allocation be increased by 3.07 percent. The councils will have their 20.60 percent share increased by 0.44 percent. The 3.07 percent and 0.44 percent will be sliced from FG’s 52.68 percent. In the new formula, the FG will take 45.17 percent, states will share 29.79 percent while the 774 councils will have 21.05 percent. The RAMFC chairman, Elias Mbam presented the report. Buhari, in a statement from his Special Adviser on media and Publicity Femi Adesina, said the proposal will be subjected to internal review while awaiting finalization scrutiny by the National Assembly. The statement from the Presidential Adviser reads: “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 listed some of the proposed amendments in the report as follows: Establishing local government as a tier of government and the associated abrogation of the state/ local government account. Moving airports; finger prints identification and criminal records from the exclusive legislative list to the concurrent legislative list. Empowering the RAMFC to enforce compliance with remittance of accruals into and disbursement of revenue from the federation account ; and streamlining the procedure for reviewing the revenue allocation formula. The president commended the RAMFC for a job well done, pledging his commitment and support to the members in carrying out their constitutional mandates. Buhari said further, “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 more available for tackling insecurity, confront climate change, and its associated global warming and make life more meaningful for our rapid growing population.” Moreover, Buhari stated that as an advocate of grassroots development, he had always remained committed to ensuring that all tiers of government were treated fairly, equally and justly in the sharing of national resources.” Thereafter, Buhari declared that for the nation to have a lasting review of the present revenue allocation formula, there must first be an agreement on the responsibilities to be carried out by all the tiers of government. The president added: “We must note the increasing visibility in sub-national level responsibilities due to weaknesses at that level, for example, primary health care, basic primary education; levels of insecurity and increased remittances to states and local governments through the Value Added Tax sharing formula, while the FG has only 15 percent and the states and local governments share 50 percent and 35 percent respectively.” The Secretary to the Government of the Federation (SGF) Boss Mustapha, said the RAMFC followed due process in undertaking the exercise. Giving the synopsis of the report, Mustapha said it was in four volumes, including a summary of the main report. On his own side, RAMFC chairman Mbam said the 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). In view of the fact that the current revenue allocation formula is based on the unitary form of government in the federation of Nigeria, the proposed review should be on the basis that Nigeria is a federation. Therefore, the right and proper revenue allocation formula is 60 percent for the state or region and 40 percent for the government of the federation as enshrined in the Independence Constitution of 1960 and the Republican Constitution of 1963. Since a return to true federalism is the answer to our insecurity and poverty, a return to true federalism is the answer to our revenue allocation formula too.