Economic and development experts have called for more accountability at the subnational levels as the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) begins the review of revenue sharing formula for the country.

They made the disclosure in Abuja on Monday at a press conference by the RMAFC, stressing the need for ring-fencing as states are set to get more resources.

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) disclosed that it has initiated a fresh review of Nigeria’s revenue allocation framework among the federal, state, and local governments.

Chairman of the commission, Dr. Mohammed Shehu at the briefing stated that the review was long overdue given the nation’s evolving economic and political landscape.

He explained that the goal was to design a “fair, just, and equitable” sharing formula that mirrors the responsibilities, financial needs and capacities of the three tiers of government, in line with their constitutional mandates.

“Currently, the revenue distribution stands at 52.6 per cent for the Federal Government, 26.7 per cent for states, and 20.6 per cent for local councils. Additionally, one per cent each is reserved for the Federal Capital Territory, ecological fund, natural resources, and the stabilisation fund.

Quoting Paragraph 32 (b), Part I of the Third Schedule of the 1999 Constitution (as amended), Shehu reminded stakeholders that the RMAFC is mandated to “review, from time to time, the revenue allocation formulae and principles in operation to ensure conformity with changing realities.”

“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,” he said.

‘Why states deserve more revenue’

Shehu highlighted recent constitutional amendments by the Ninth National Assembly, which gave key responsibilities—including electricity generation, transmission and distribution, railways, and correctional centres—from the Exclusive Legislative List to the Concurrent List.

He noted that this development had imposed heavier fiscal and administrative demands on state governments.

This, he stressed, made it critical to re-examine fiscal federalism to promote state-level economic growth, reduce overdependence on the centre, and guarantee fairness and sustainability.

He assured that the commission would conduct a comprehensive and transparent review that takes into account developmental disparities, fiscal performance, service delivery obligations, and sectoral needs.

“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,” he added.

Also speaking, Kabir Mashi, chairman of the formula committee, said the commission produced a report on the Vertical Revenue Allocation Formula in April 2022.

Mashi stated that the report was jettisoned on the basis of the fact that the constitutional amendment by the 9th National Assembly in 2023 affected the responsibilities of the various tiers of government.

“Hence, the need for a fresh review of the revenue allocation formula in its entirety to reflect the current socio-economic challenges in the country, as well as the new economic policies of the current administration.

“Today’s gathering marks a pivotal step in the evolution of our fiscal federalism and intergovernmental fiscal relations.

“It provides an opportunity for us to intimate you of our activities so as to understand the approach and offer your perspectives on this vital matter,’’ he said.

Mr Mashi said that the commission was determined to conduct the review through a process that is inclusive, transparent, evidence-based and fully aligned with the spirit and letters of the Nigerian Constitution.

Experts advocate ring-fencing

Speaking on the issue, Prof. Uche Uwaleke noted that if more allocations will be given to states, it should be fenced around projects, especially infrastructure.

“States are getting about 26% and now it will be reviewed to for instance 30 or 40. Is it not better, the percentage increase is also tied to something to say infrastructure fund?

Today, the sovereign wealth fund has a stabilization fund. In the allocation formula, we also have a stabilization fund, 0.5%. So, nothing stops us from also saying the extra money we want to push to states now, we can also reinvest those funds so that when they go to those states, we are sure of what the money is going into.

“So, now that states have to take care of electricity, for example, they also have that mandate to go into electricity, that’s infrastructure. We can say, and railways, we can say the extra money should be for infrastructure fund so that states won’t spend the money carelessly,” Uwaleke said.

Speaking further, he said it is also important to benchmark what happens to similar federating units in other countries.

“We should also benchmark Canada, for example, Brazil, India, similar federations, what is the situation there? So, with respect to the horizontal, since we are talking about evidence-based, data-driven, wouldn’t it make sense to, say, reduce population from 30% to, say, whatever you are reducing from there, you take it to social development effort? So, it speaks to the efforts of subnationals in the area of, let’s say, health, education.

“Let us also bear in mind that in view of the new tax laws that are going to be implemented, states are also going to have more money. The FG, for example, in a particular case, will be relinquishing 5% of its VAT share to states.

So, it’s important that when we push money to states, and in support of pushing more money to them, we find a way of ensuring that the monies we are pushing to them are tied to something for accountability sake. They can be targeted to specific things, particularly infrastructure,” he said

Also speaking, Prof. Jibrin Ibrahim stated that due to the fact that states have overtime been unaccountable, there is the need to ensure that any increase is monitored and accounted for.

“The First Republic was a federation where regional autonomy was extremely important and therefore, the structure of fiscal relations represented that strength of regional governments over the federal government. Subsequently, with the arrival of the military and 29 years of military rule, the structure of fiscal relations transformed considerably with the military being in charge of the federal government and clearly establishing a superiority of the federal level over the federating levels. And that is what reflects in the current allocation formula where the boss is clearly the federal government, but I think it also reflected the reality of the structure of the political economy because we ran a rentier state where petroleum resources were the central mainstay of the economy and the issue for politics was to distribute this rent from petrol.

“Now that rent has been disappearing fast over the past few years and we are in a critical phase of national development, we have the question of rethinking both revenue generation and revenue allocation on the basis of current transformations in the economy and therefore, what is ongoing now is extremely important.

And I think in the discussions that will follow this process, looking at the political economy and seeing what type of economy we are building and building a reward system around that is what is most critical. And I think in doing that, we have to ensure that there is significant inclusiveness in terms of the discussion.

“I think the reason why we are proposing ring fencing is because of the terrible level of accountability at the level of state governments. So nobody is comfortable with the idea of giving more money to state governments without ring-fencing it. But I think that’s a deeper statement that has to enter into the debate more seriously.

“That the precondition for a significant transformation of the structure of revenue allocation has to be a correspondent increase at the levels of accountability at the state level. And that has to be very centrally part of the debate. And for me, that’s the way forward,” he further explained.

Also speaking, Auwal Musa Rafsanjani, Executive Director of the Civil Society Legislative Advocacy Centre (CISLAC) stated that Nigerians need to suggest and recommend ways in which there can be a better revenue sharing formula in the country.

“Since 1999, when democracy returned, civil society had been at the forefront of agitating and advocating for real discussion around the fiscal revenue allocation formula in this country. And I think a lot of Nigerians’ attention has been on the Commission, especially when it comes to issues of remuneration.

“Public officers, many Nigerians consider what they take as outrageous. A lot of members of the legislature and so many political appointees, Nigerians see them as just collecting money that they don’t deserve to really collect. The salary, in many instances, people believe is not even justifiable, even though what they say they earn is not what eventually they collect.

“And there’s no justice in this collection. Because professors that have been in the university for 30 years, their salary is nothing compared to a councillor or local government chairman. I think there must be justice to address these imbalances in the earnings that public officials are taking, especially the politicians and the political appointees.

“If you look at the doctors, the professionals, what they earn is nothing to write about. There’s no motivation. And that is why many of them die in poverty.

“Many of them cannot even pay their children’s school fees. Police officers, they will retire. They cannot even feed themselves.

“So I think there must be justice in the way and manner in which this sharing is done. Secondly, with the influx of money going to the local governments, and because of the autonomy given to the local governments, it is absolutely necessary that first, we need to ensure that the constitution is also amended to be in line with the Supreme Court judgment, because the state governors are still having some control on the local government. In fact, it is just on the paper, because even if they send the money to them, they’ve already given them what to do.

“So that’s why we have all these state-managed elections and appointments that they do to the so-called caretakers. So which means that we need to strengthen the local government, because if the development cannot happen at the grassroot level, we will just not see really the dividend of democracy,” he added (Daily Trust)