The Federal Government has initiated a comprehensive review of Nigeria’s revenue allocation formula, 33 years after the last major overhaul, setting the stage for possible adjustments to the shares of states and local governments amid expanded subnational responsibilities.
Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Shehu, said in Abuja on Monday that the exercise will “reshape fiscal federalism” and align the framework with constitutional changes that devolved powers over electricity, railways and correctional services to the states.
“These amendments have placed enormous burdens on state governments,” he said. “It has therefore become essential to re-evaluate our fiscal federalism to ensure equity, responsiveness and sustainability.”
Nigeria currently shares federally collected revenue on a 52.68% : 26.72% : 20.60% basis among the Federal Government, States and Local Governments, respectively.
From the federal portion, 4.18% is reserved for special funds — 1% for the FCT, 1% for ecological challenges, 1.68% for natural resources and 0.5% for stabilisation. The last full formula review occurred in 1992, with limited executive adjustments in 2002.
Shehu pledged an inclusive, data-driven and transparent process, with consultations covering the Presidency, National Assembly, state governors, local government councils, the judiciary, ministries, civil society, traditional rulers, private sector and development partners.
“We are committed to integrating cutting-edge research, empirical data and international best practice. This is a historic opportunity to build a more resilient and equitable fiscal system for Nigeria, and we shall not fail,” he said.
Stakeholder commentary underscored the need for discipline alongside any reallocation. Financial analyst Thomas Ndengbepe urged that incremental state revenues be ring-fenced for infrastructure, while Auwal Rafsanjani of CISLAC warned that without local government reforms, grassroots development would remain constrained.
Governance expert Husseini Abdu cautioned against the diversion of federal allocations into constituency projects, calling for greater inclusiveness and transparency in the new framework.
The review also revives procedural questions that slowed prior attempts, including whether RMAFC’s proposals should be transmitted directly to the National Assembly rather than via the Presidency.
Shehu said the Commission expects to complete the review before year-end, subject to consultations and legislative approval.
RMAFC credited President Bola Tinubu for granting the Commission financial and administrative autonomy under its new enabling law, describing the reform as pivotal to repositioning the body as a truly federal institution capable of conducting a rigorous, evidence-based review.
States and local governments have pressed for a bigger share to meet service-delivery mandates that have widened in scope since the last reform. With inflation, infrastructure deficits and security pressures stretching subnational budgets, the outcome of the review will directly influence capital planning, wage obligations and social services across the federation.
RMAFC’s brief signals that equity of burden and capacity will be central to the new proposal: a formula that recognises devolved functions, strengthens service delivery, and preserves macroeconomic stability.
As consultations begin, investors and policy watchers will track how far the final blueprint shifts the current 52.68%–26.72%–20.60% split, how special funds are treated, and what accountability safeguards accompany any redistribution.
“The review is not just about figures,” Shehu said. “It is about safeguarding Nigeria’s federal system, ensuring fairness and strengthening the capacity of every tier of government to deliver development.”
