Written by Sarah NEGEDU

FG to review revenue sharing formula

The federal government is considering plans to review the current revenue sharing formula among the three tiers of government.

The Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, will this week constitute a standing committee for this purpose.

Under the present sharing arrangement, the Federal Government receives 52.68percent of the national revenue, while the states and the local governments are allocated 26.72percent and 20.60percent, respectively.

Also 13 percent of the national oil and gas revenue is allocated to the oil producing states and communities as derivation fund.

The Chairman of the commission, Mr. Elias Mbam, said the proposed review of the revenue formula was informed by current economic realities, adding that the standing committee would commence work immediately.

The current revenue sharing formula was designed during the administration of former President Olusegun Obasanjo.

The fresh plan to review the formula would not be the first time the RMAFC had undertaken to tinker with the country’s revenue sharing arrangement in recent times.

In 2013 the commission embarked on a nationwide consultation to the 36 states and also met with notable figures in line with a plan to review the formula towards ensuring ‘balanced development’ of the country.

A proposed revised revenue sharing formula was ready by December 2014 but the document was never implemented.

Speaking on the latest plan to review the sharing formula, Mbam said that RMAFC would also work towards the diversification of the country’s revenue base in order to ensure a more sustainable growth and economic development in the country.

He explained that diversification would be advanced through non-oil sectors such as agriculture, manufacturing and solid minerals.

Mbam said, “My agenda is to expand the sources of revenue for the federation. I will like to expand the cake that we are sharing so that people will get reasonable quantity.

“I intend to do this through diversification in areas outside oil and gas and that include solid minerals, agriculture and manufacturing.

“So we will encourage states and let them know what is available outside oil and gas so that they can develop other aspects of the economy to their own benefit.”



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