The Federal Government of Nigeria has announced plans to overhaul the country’s decades-old revenue allocation formula, aiming to create a more equitable, responsive, and inclusive system that reflects current realities.
Dr. Mohammed Shehu, Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), made this known during a panel discussion on the review of the revenue allocation formula, held Tuesday in Abuja.
Shehu emphasized that the existing formula, which dates back to 1992, no longer aligns with Nigeria’s economic growth, demographic expansion, and constitutional evolution.
“Since 1992, our economy has diversified, the population has surged beyond 230 million, spending patterns have changed significantly, and constitutional amendments have devolved more responsibilities to sub-national governments,” he said.
He stressed that these shifts necessitate a bold, data-driven, and inclusive review of the formula. The current initiative, he said, is designed to stimulate informed dialogue among stakeholders from government, academia, development partners, and civil society.
“The goal is to restructure Nigeria’s revenue sharing model to reflect contemporary socioeconomic conditions and global best practices,” Shehu noted.
The RMAFC chairman explained that the review aims to deepen understanding of Nigeria’s fiscal federalism, address emerging fiscal pressures, and reduce developmental imbalances across the federal, state, and local governments.
He also revealed that the commission has already taken several steps, including consultations with experts, ministries, departments and agencies (MDAs), and international development partners to support the analytical foundation for a new formula.
Additionally, preliminary models have been developed, and policy workshops conducted to keep RMAFC members informed on the technical aspects of the review.
“We are committed to a transparent, evidence-based, and participatory process that reflects constitutional provisions and builds public confidence,” Shehu said.
He added that the success of the review would not be measured solely by the numbers proposed, but by the national consensus achieved around them.
“Every stakeholder must see themselves as co-architects of a renewed fiscal framework—one that promotes equity, accountability, and sustainable development,” he stated.
According to Shehu, the ultimate goal is to design a formula that enables sub-national governments to effectively fulfil their constitutional mandates while preserving national cohesion and economic stability.
Also speaking at the event, the Minister of Budget and Economic Planning, Senator Abubakar Bagudu, highlighted the importance of addressing insecurity, stressing that increased funding for security would help foster economic growth and stability.
In her remarks, Hajia Hadiza Usman, Special Assistant to the President on Policy Coordination, reiterated President Bola Tinubu’s directive for a comprehensive review of the revenue allocation structure.
“We’re examining constitutional gaps and ensuring that the revised formula fairly reflects resource distribution across all levels of government,” she said.
She added that the process would be benchmarked against international best practices and emphasized the need for greater accountability in resource mobilization and allocation.