According to a source, there are strong indications that state governors will revert to and adopt the recommendation of an earlier report submitted by a sub-committee previously set up in 2011, to demand 42% of the federal allocation as against the 26.72% they currently get.
The details: Ahead of the review of the revenue sharing formula, which is expected to start next week, governors are preparing to also ask the Federal Government to slash its share from the current 52.68% to 37%, while requesting that the share of local governments be increased from the current 20.60% to 23% in the new formula.
The source further disclosed that, “A committee was set up by the Nigerian Governors’ Forum and that proposal on the revenue sharing formula is the position of the Forum. The sub-committee met as far back as 2011 and it was made up of six governors, headed by the then Governor of Lagos State, Mr Babatunde Fashola.
“The other members of the sub-committee were Murtala Nyako of Adamawa State; Sullivan Chime of Enugu State; Babangida Aliyu of Niger State; Rotimi Amaechi of Rivers State and Aliyu Wamakko of Sokoto State.
“From the report they submitted to the Forum, they recommended that the Federal Government should now get 35%; states should get 42% and local government should get 23%. That was the recommendation and that is what we have continued to push for.”
The back story: Earlier on Tuesday, the Chairman, Revenue Mobilisation Allocation and Fiscal Commission, Mr Elias Mbam, revealed that the commission would set up a committee in the coming week to review the revenue sharing formula for federal, states and local governments due to the current economic realities.
- The RMAFC chairman revealed that the purpose of the review is to expand and increase the scope of revenue collection in the country and allow states and local governments to have a bigger share of the “national cake.”
- The current revenue allocation formula, which was designed during the administration of former President Olusegun Obasanjo, recommended that the Federal Government gets 52.68%, while the states and local governments will receive 26.72% and 20.60% of the total amount respectively.
- Similarly, the 13% federally collected revenue from oil and gas is given to the oil-producing states as derivation revenue to compensate for ecological disasters arising from oil production.
The Governors’ concern: Meanwhile, governors are reportedly concerned about the minimum wage implementation, insisting that for the new N30,000 minimum wage to see the light of the day, the allocation must accommodate the states’ financial short-coming.
The governors noted that managing states today is becoming very expensive and the responsibility is on state governments to inject funds to help the agencies function. The source reportedly disclosed the following that,
“The cost of securing the states has simply become more expensive and the burden is now heavy on the states. The population has also increased over time and these people are in the respective states.
“During the negotiation for this minimum wage, the governors again presented their position. They were initially reluctant to agree to the N30,000 but eventually gave in but stated, that if it (minimum wage) must be implemented with ease, there must be an adjustment in the revenue sharing formula. The report was again sent to the Federal Government but nothing was done about it.”
In the meantime, members of the Nigerian Governors’ Forum (NGF) are ready to share their perspectives with the Federal Government on how to have a new revenue formula with the revenue commission.
Over time, the allocation formula has generated controversies and remained a key factor in the clamour for restructuring in the country.