The Federal Government of Nigeria says it plans to set up a committee tasked with the responsibility of reviewing the revenue sharing formula for federal, state and local governments in the country due to current economic realities.
The Chairman of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC), Mr. Elias Mbam who disclosed this to newsmen in Abuja on Tuesday said the Commission would advocate for the diversification of the nation’s revenue to ensure more sustainable growth and development.
“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 includes solid minerals, agriculture and manufacturing.
“So, we will encourage states and let them know what is available outside oil and gas so they can develop those aspects of the economy to their own benefit,” Mbam said.
Under the current revenue allocation formula which was formulated during the administration of former President, Olusegun Obasanjo, the Federal government gets 52.68 percent, states get 26.72 percent while 20.60 percent goes to local governments.
According to the formula, 13 percent of revenue collected from oil and gas is returned to the oil-producing states as derivation revenue to compensate for ecological disasters arising from oil production.
However in 2013, RMAFC saw the need to review the formula for balanced development of the country, hence it embarked on a nationwide consultation after which it came out with a proposed new revenue formula.