Revision Of Nigeria’s Revenue Sharing Formula: Another wild goose chase?

By GTI Research
“The chairman of the Nigerian Revenue Mobilization Allocation and Fiscal Commission (RMAFC), Mr. Elias Mbam, this week hinted that the federal government will in the coming weeks set up a committee to review the current revenue sharing formula among the three levels of government to suit the “current economic realities”.
“While this proposed action can be seen as the Federal Government’s response to calls from several quarters to increase revenue allocation to states and local governments owing to the inability of many states and local government to sustainably pay workers salary and fund critical infrastructure, we are of the view that a review of the current revenue sharing formula alone will not provide a lasting solution required to solve the problem of insolvency across the three levels of government.
“Historically, Nigeria has had many commissions set up in the pre and post-independent period (including military decrees in some cases) to find the best revenue sharing the formula for the three levels of government but to no avail.
“For instance, between the years 1978 and 2000, Nigeria ran seven different revenue sharing formulas in her attempt to attain fair distribution of national resources among the levels of government.
“However, all of these efforts failed to resolve the controversies around national resource allocation as the societal needs continued to outpace the “oil-centered” government revenue.
“As a result of this recurring dissatisfaction, former president Olusegun Obasanjo in the year 2000 came up with a presidential executive order which delivered the current revenue sharing formula of 52.68 %: 26.72 %: 20.60% for federal, states and local government respectively, on all revenue accrued to the federation account each month.
With rising underperformance at the federal, state, and local government levels fueling the new call for the review of the federation’s revenue sharing formula, we believe this proposition will only bring about temporary respite before another review will be called for.
“Hence, we opine that to fully resolve the recurring problem of revenue sharing, federating units (i.e. each state) should be empowered to control the resources within their territory while a certain percentage is contributed to the federal level.
This, we believe, will create healthy competition among the states, and by extension spur them to develop ingenuine ways of generating revenues.”

Reports, on Saturday morning are that governors are angling that the Federal Government’s share be slashed from 52.68% to 37% share of the federal allocation, while state should go with 42%, almost double the current 26.72%, while the local government should get 23% of the pie, from 20.6%.
Incidentally, most members of the committee of the governors’ forum that made recommended the proposed formula in 2011, including Babatunde Raji Fashola, who superintended over Lagos, was a super minister in the just-ended Federal Executive Council, in charge of three ministries- Power, Works, and Housing. He has been cleared for a return to the council by the Senate.
It is not known whether he and Rotimi Amaechi, a member of the committee and then governor of oil-rich Rivers State, who has also been cleared for a return to the cabinet, will still hold on to the conviction they once were promoters, now that the table has turned.