- Endorses reduction in federal, states’ shares
- RMAFC assures of December 2021 delivery date
- FCT seeks special funding status for development
BY COBHAM NSA – In a move that supports growing agitations for grassroots’ empowerment towards effective democracy dividends delivery, the Federal Government is proposing about 3.13 per cent rise in the revenue allocation to the country’s 774 local government councils.
This is as the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC) expressed commitment to a ‘fair, just and equitable revenue allocation formula’ with the Federal Capital Territory (FCT) demanding a special funding status to handle the massive infrastructural requirements in the nation’s capital.
And to engender this support of paradigm shift to development at the grassroots, the federal government is also canvassing that its allocation and the State governments’ share in the proposed revised revenue formula should step down by 2.03 percent and 1.1 percent respectively.
Articulating its submissions in a document presented to the Committee reviewing the current revenue allocation formula, the Federal Government however insisted that oil-producing states should be satisfied with retaining the present 13 per cent allocation as their derivation revenue.
Secretary to the Government of the Federation (SGF), Boss Mustapha, canvassed the government position at the grand finale of RMAFC’s organised public hearings and consultations on the review of the vertical revenue allocation formula held in Abuja on Tuesday.
By these proposed adjustments, the Federal Government’s allocation will drop to 50.65 per cent from the current 52.68 percent; the 36 state governments are to receive 25.62 per cent instead of the existing 26.72 per cent, with 774 Local Governments getting an upward lift to 23.73 percent from their present take-home of 20.60 per cent.
The SGF said, in arriving at the proposal; “The Federal Government has taken cognizance of the growing clamour for a review of the present vertical revenue allocation formula, President Muhammadu Buhari’s commitment to ensuring resources for the development get to the poorest of the poor in our rural communities, imperative to incorporate local communities in our security architecture as well enhancing equitable and inclusive national development.”
Mustapha, who was represented by the Permanent Secretary, Political and Economic Affairs, Office of the SGF, Andrew Adejoh, said the government’s guiding principle in re-evaluating the existing revenue allocation formula is the level of responsibilities attached to each tier of government based on provisions outlined in the 1999 Constitution as Amended.
Citing the Second Schedule of the Nigerian constitution that contains 68 items on the Exclusive Legislative List, the SGF said this imposes on the government huge responsibility of deploying resources that accrue to the federation in providing services and related developmental needs.
He said the Review Committee can only achieve a vertical revenue allocation formula that is acceptable to all by ultimately agreeing on the responsibilities bestowed on each tier of government, adding that an exhaustive analysis of these constitutional duties would help in determining in support of either upwards or downwards review of the existing revenue allocation formula.
Mustapha, who also made reference to the concurrent lists of about 30 items in which the federal and state governments are required to jointly deploy available resources to handle them, said; “In order to appreciate the position of the Federal Government, it is also necessary I share with us the vertical disbursement of the Federal Government’s share of 52.68%, which is as follows: Disbursement of the FGN Share of 52.68%; Consolidated Revenue Fund (CRF) – 48.50%; Federal Capital Territory (Like a State) – 1.00%; Natural Resources Development Fund (States are the beneficiaries) – 1.68%; Ecological Funds – 1.00% (45% to NEMA, NEDC, NALDA and NAGGW, 55% addressing ecological challenges at Sun-National levels); Stabilisation Account – 0.50% (25 % – 0.125 to NSIA and 75% 0.375 managed by OAGF and mostly utilized for emergency requests by States).
“Similarly, within the Consolidated Revenue Fund, disbursements are made for Debt Servicing, Statutory Transfers, Salaries, Pension and Gratuities, capital supplementation amongst others. It is, therefore, clear from the above that the Federal Government spends most of its resources on and for the state and local government levels.”
However, he stated that “When you juxtapose this with the equally greater number or responsibilities on the Exclusive Legislative List, you would even want to make a case for greater allocation to the Federal Government”, adding that the decision to review existing vertical revenue allocation formula includes the government’s increasing visibility in sub-national level responsibilities due to weaknesses at that level, in terms of primary health care, basic primary education.
Others are increasing challenges of insecurity and increased remittances to state and local governments through the Value Added Tax (VAT) sharing formula, where the federal government has only 15 percent compared to the 50 and 35 per cent shares that accrue to state and local governments respectively.
Mustapha urged the Review Committee to be constructive in its consideration of various proposals, given the dwindling national revenue base and the poor outputs of states’ Internally Generated Revenues (IGR).
“Any review of the vertical revenue allocation formula must be consistent with the constitutional responsibilities of all the tiers of Government,” the SGF said; adding; “Until such a time that the constitution is fully reviewed and more responsibilities are taken out of the Exclusive Legislative List, we might not be able to arrive at an equitable, unbiased and sustainable vertical revenue formula agreeable to all.”
He said all Nigerians have agreed that the present revenue allocation formula, both vertical and horizontal, was long over-due for a review not just because the last one was done in 1992, but also contemporary issues since then, such as heightened insecurity, decaying infrastructure, need for appropriately matching statutory functions and tax powers, need to be taken into consideration in the revenue allocation decision making processes.
Addressing the Town Hall meeting, RMAFC Chairman, Elias Mbam, said the Commission is unrelenting in its resolve to ensure a successful review process that finally produces a ‘fair, just and equitable revenue allocation formula’ for the country.
Mbam said the 1999 Constitution (as amended) empowers the Commission to periodically review the revenue allocation formulae and principles to reflect the changing socio-economic, cultural and political realities, noting since the last review in 1992, things have changed significantly, necessitating the process of reviewing the subsisting vertical revenue allocation formula among the three tiers of government.
He said focused on an all-inclusive participation process, RMAFC invited memoranda from stakeholders through advertisements in both print and electronic media, apart from the public hearing sessions in the six geo-political zones.
According to him, the public hearing was the last in the series within the last one month across the six geo-political zones to collate the views, opinions, and recommendations from interest groups and other Nigerians from diverse backgrounds on the proposed new revenue formula.
Mbam assured that the new revenue formula would be tied directly to the responsibilities of each tier of government and restated the Committee’s commitment to conclude the assignment and submit its report to the President before December 2021 ending.
In his presentation at the forum, Minister of the Federal Capital Territory (FCT), Mohammed Bello, made a case for the territory to enjoy a special funding status that would enable it to cope with the massive expansion in infrastructural requirements and rapid development across the nation’s capital to cater for its fast growing population.
Bello, who pleaded that developing Abuja should be considered a joint national project because the FCT was envisaged by its founding fathers over 41 years ago as a home for every Nigerian, said; “For us to really achieve the goals that established Abuja and the Federal Capital Territory, we have to work out a funding mechanism for Abuja.”
