The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has begun a review of Nigeria’s revenue allocation formula, which determines how funds are shared among the federal, state, and local governments.

Announcing the process at a news conference in Abuja on Monday, RMAFC Chairman Mohammed Shehu said the review was necessary to reflect current economic and constitutional realities. The last adjustment was in 1992.

The review seeks to produce a fairer, more equitable distribution of revenue based on the responsibilities, needs, and capacities of each tier of government. Currently, the Federal Government receives 52.6 per cent of federally collected revenue, while states get 26.7 per cent and local governments 20.6 per cent. One per cent each is allocated to the Federal Capital Territory, ecological fund, natural resources, and the stabilisation fund.

Citing Paragraph 32 (b), Part I of the Third Schedule of the 1999 Constitution, Shehu said the RMAFC is mandated to periodically review the allocation formula to ensure it adapts to changing realities.

He explained that constitutional amendments by the Ninth National Assembly, which devolved responsibilities such as electricity generation, railways, and prisons to states, had increased financial and administrative burdens on sub-national governments.

“The situation makes it essential to re-evaluate fiscal federalism to foster economic growth in individual states, reduce overdependence on the centre, and promote equity and sustainability,” Shehu said.

He assured that the review process would be inclusive, data-driven, and transparent, with consultations involving the Presidency, National Assembly, state governors, ALGON, judiciary, civil society, traditional rulers, the private sector, and development partners. He added that global best practices and empirical research would also guide the process.