The Senate has called for a review of Nigeria’s revenue sharing formula to give states and local government areas greater share than they get in the current formula, which gives more to the federal government.
Following a motion by Adamu Aliero, APC-Kebbi, on Thursday, the Senate said the current formula is “unconstitutional” as it has no law backing it and does not reflect the country’s present realities.
The upper chamber had on Wednesday rejected a constitution review proposal to devolve greater powers to the states, after complaints by Mr. Aliero that the proposal did not seek to also give the federating units greater share of the national revenue and control over resources.
In the present formula, about 52.68 per cent is allocated to the federal government from the Federation Account, 26.70 per cent to the 36 states and 20.60 per cent to the 776 local government areas.
The formula, being used by the Revenue Mobilisation Allocation and Fiscal Commission (RMFAC), was first enacted in 1982 before it was brought into operation at the inception of the Fourth Republic in 1999, with amendment.
However, Mr. Aliero noted that there is no law in Nigeria that backs the current revenue formula, which, in any case, should have been reviewed by RMFAC as provided by the constitution.
“Pursuant to paragraph 32 of the Third schedule of the Constitution of the Federal Republic of Nigeria as amended, the revenue mobilisation allocation and fiscal commission was established to among other things review from time to time the revenue allocation and principles in operation to ensure conformity with changing realities,” began Mr. Aliero.
“This would be possible provided that any revenue formula which has been accepted by an Act of the National Assembly shall remain in force for a period of not less than five years from the date of the commencement of the Act.
“The present Revenue Allocation Formula has been in operation before the commencement of this democratic dispensation in 1999 and there is no extant Act of the National Assembly accepting the present Revenue Allocation Formula which means the formula in use is unconstitutional.
“The current formula is blind to present and changing economic realities and justifiably skewed in favour of the federal government, which is why most of the states of the federation are under the bail out of the federal government which runs into billions of naira and has resulted to debts of states and the fear is that successive state governments are going to inherit huge and unsurmountable debts.”
Following Mr. Aliero’s motion, the Senate resolved to urge the RMFAC to review the current revenue sharing formula to “reflect present and changing economic realities of our country.”
It also asked the federal government to propose a new formula for passage into law by the National Assembly to end the current formula.