Nigeria needs new revenue-sharing formula to address emerging challenges’
Since 1992, when the last review was made, six additional states have been created, thus overstretching the states’ share from the federation account. The number of local government councils also increased from 589 to 774.
The RMAFC boss said the creation of additional political entities is one of the compelling reasons for the planned review of the vertical allocation formula. The vertical formula provides a template for the allocation of common resources among the federating units.
He pointed out the glaring inability of the vertical formula to “adequately address the apparent mismatch between statutorily assigned functions and tax powers of each of the three levels of government,” noting that there have been agitations from different interest groups for a review.
The Commission had made several attempts at reviewing the template but the processes were truncated. For instance, a judgment of the Supreme Court on April 5, 2002, recognizing federal, state, and local governments as beneficiaries of the federation account ended the 2001 recommendation.
The Commission is currently on a nationwide sensitization to prepare critical stakeholders for a review of the revenue sharing template to align with the current stage of the country’s development.
The head of the Commission said the review would be completed this year to give the country an equitable revenue sharing formula.