A new revenue formula that will replace the existing revenue template, which guides the sharing of revenue in the federation purse, is being revisited by the Revenue Mobilisation Allocation and Fiscal Commission ( RMAFC).
In 2022, the leadership of RMAFC was headed by Engr. Elias Mbam and the commission presented a report of the review of the vertical revenue allocation formula to the immediate past President, late Muhammadu Buhari, after the commission failed to meet the 2021 deadline.
The new formula proposes 45.17% for FG, 29.79% for states, and 21.04% for LGAs
Mbam had justified the adoption of the vertical formula by the commission, which advised 45.17 per cent for the Federal Government, 29.79 per cent for state governments and 21.04 per cent for the local governments.
Under Special Funds, he said the report by the commission recommended 1.0 per cent for Ecology, 0.5 per cent for Stabilisation, 1.3 per cent for Development of Natural Resources, and 1.2 per cent for the FCT.
The commission will be addressing a press conference on Monday, during which it’s expected to come out with a policy statement with regards to the new revenue formula.
The subsisting old revenue formula was designed during the tenure of former President Olusegun Obasanjo.
Under the current formula, the Federal Government gets 52.68 per cent, the 36 states get 26.72 per cent, while the 774 local government areas in the country share 20.60 per cent every month.
The proposed formula, therefore, suggested an upward review for states and local governments, but a downward review for the federal government.
In arriving at the new vertical revenue allocation formula, Mbam told the President the commission had consulted widely with major stakeholders, public hearings in all the geo-political zones, administered questionnaires and studied some other federations with similar fiscal arrangements like Nigeria to draw useful lessons from their experiences.
The late President Buhari could not take action on the revenue formula before leaving the office.
Sources who spoke to the New Telegraph were of the view that, revenue formula re-visit by RMAFC may have been spurred by the President Bola Ahmed’s directive last week urging reduction in revenue collection percentages by key revenue collection agencies such as the Nigeria Customs Service (NCS), Federal Inland Revenue Service ( FIRS), the Nigerian Upstream Petroleum Regulatory Commission, the Nigerian Maritime Administration and Safety Agency, and the Nigerian National Petroleum Company Limited.
During last Wednesday’s FEC meeting, Tinubu directed a review of deductions and revenue retention practices by Nigeria’s major revenue-generating agencies.
The move is to boost public savings, improve spending efficiency, and unlock resources for growth. The President’s directive was disclosed to journalists by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.
According to Edun, Tinubu specifically called for a reassessment of NNPC’s 30 per cent management fee and 30 per cent frontier exploration deduction under the Petroleum Industry Act.
He tasked the Economic Management Team, chaired by Edun, to present actionable recommendations to FEC on the optimal way forward.
𝗙𝗼𝗹𝗹𝗼𝘄 𝗢𝘂𝗿 𝗪𝗵𝗮𝘁𝘀𝗔𝗽𝗽 𝗖𝗵𝗮𝗻𝗻𝗲𝗹 𝗧𝗼 𝗚𝗲𝘁 𝗟𝗮𝘁𝗲𝘀𝘁 𝗡𝗲𝘄𝘀 𝗔𝘀 𝗜𝘁'𝘀 𝗗𝗿𝗼𝗽!
