Chairman RMAFC Mr. Elias Mbam
The Revenue Mobilization Allocation and Fiscal Commission (RMAFC) has written to all the 36 state governors and other stakeholders on its intention to hold a nationwide consultation with them on the issue.
The commission also plans to verify available data in each state to justify claims for review or otherwise.
No fewer than six teams have been set up for the nationwide field work scheduled to commence on April 20.It will last a month.
The current revenue allocation formula is as follows: Federal Government (52%); States (26.72%); and Local Governments (20.60%)...
A committee raised by the Nigerian Governors Forum and headed by Governor Babatunde Fashola of Lagos State, has recommended a drastic reduction in the Federal Government’s allocation.
The governors want this new formula: FG (35%); States (42%); and LGAs (23%).
The oil producing states are pushing for a considerable increase in derivation from the present 13%. Some stakeholders want up to 50% while some want 100% control while the states would be paying tax on oil and other mineral resources to the Federal Government.
For instance, the Speakers of the six state Houses of Assembly in the South-South, rising from a meeting at the Le Meridien Hotel and Golf Resorts in Uyo on Friday, demanded an upward review of the derivation formula from 13 per cent to 50 per cent.
The revenue sharing debate assumed a twist last month after Northern governors and the newly formed Coalition of Northern Leaders faulted what they saw as the huge financial allocation to the oil producing states and said the Northern states were being cheated under the arrangement. The Junaid Mohammed-led group even claimed the oil producing states lack the capacity to manage the oil wealth accruing to them. Governor Emmanuel Uduaghan, in a swift response to that suggestion called it insulting.
A top source told The nation in Abuja yesterday that : "We will start verifying indices that will guide our proposed new revenue allocation formula. We have written all the state governors and other stakeholders, including local governments, on our proposed nationwide tour.
"The verification of indices will take about one month in the field beginning from April 20. We want to be as scientific as much as possible in arriving at a sustainable revenue allocation formula.
"We will look into such indices like population, Internally Generated Revenue, resources, school enrolment, land mass, and others.
"Since the return of democracy in 1999, there has not been any constitutionally backed revenue allocation formula. The last constitutionally backed allocation review was in 1992.
"The formula in place is only through Executive Order, not by the instrument of the National Assembly."
Section 162(2) empowers the RMAFC to determine the nation’s revenue allocation formula.
The section reads: "The President upon the receipt of advice from the Revenue Mobilization Allocation and Fiscal Commission shall table before the National Assembly proposals for revenue allocation from the Federation Account and in determining the formula, the National Assembly shall take into account, the allocation principles especially those of population, equality of states, internal revenue generation, land mass, terrain as well as population density.
"Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than 13 per cent of the revenue accruing to the Federation Account directly from any natural resources."
Ex-President Olusegun Obasanjo had, in 2002, invoked an Executive Order to share revenue as follows: FG (54.68%), States (24.72%) and LGs (20.60%).
In March 2004, the then Minister of Finance, Dr. Ngozi Okonjo-Iweala issued a letter modifying the Executive Order that increased state allocation to 26.72% and reduced FG’s share to 52.68%.
The commission had in September 2004 submitted a new formula to ex-President Olusegun Obasanjo, who later forwarded it to the National Assembly for consideration in line with Section 162(2) of the 1999 Constitution. The proposal with the National Assembly makes the following recommendations:
Federal Government (53.69%); States (31.10%); and Local government Areas (15.21 %.).
6.5% of Federal Government’s allocation is reserved for Special Funds, leaving it with 47.19%
The breakdown of the 6.5% includes Ecological Fund (1.50%); Solid Mineral Fund (1.75%), National Reserve Fund (1.50%) and Agricultural Development Fund (1.75%).
The proposal with the National Assembly is yet to be approved.
Although a Special Committee of the House of Representatives (headed by ex-Majority Leader, Alhaji Abdul Ningi) organised public hearings in all the six geopolitical zones between August 28 and 30, 2006, the consideration of the bill has been stalled by politics.
A source in RMAFC added: "We can no longer work with the 2004 proposal before the National Assembly because of change in indices. Development indicators cannot be static in any nation.
"We are really going to the field for a thorough job. Although we have limited resources, we will try to cope."
