Nigeria is set for a major fiscal shake-up as the Federal Government initiates a long-overdue review of the nation’s revenue allocation framework — the first comprehensive reform in over three decades.
Mohammed Shehu, Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), revealed the plan in Abuja, describing it as a “historic reset of fiscal federalism” designed to align resource distribution with the growing responsibilities of state and local governments.
The country’s current formula — 52.68% for the Federal Government, 26.72% for states, and 20.60% for local councils — has remained largely unchanged since 1992, with only minor executive adjustments in 2002. But constitutional amendments under the 9th National Assembly, which devolved oversight of electricity, railways, and correctional centres to states, have piled fresh financial burdens on subnational governments.
“These shifts have expanded state responsibilities far beyond what the present formula can sustain,” Shehu said. “It is imperative that we craft a new model that ensures fairness, responsiveness, and long-term sustainability.”
Under the federal share, 4.18% is currently carved out for special intervention funds — including allocations for the FCT, ecological issues, natural resources, and a stabilisation fund. The new review, Shehu promised, will be inclusive, data-driven, and transparent, drawing on research, international best practices, and broad consultations with stakeholders ranging from the Presidency and National Assembly to civil society, traditional leaders, the private sector, and development partners.
Analysts at the launch urged that any adjustments be tied to accountability. Financial experts suggested that increased state revenues should be earmarked for infrastructure, while governance advocates cautioned that without genuine local government reforms, rural development would remain stagnant. Others warned against legislators redirecting allocations into constituency projects, a practice seen as undermining transparency.
The Commission has pledged to conclude the review before the end of the year, pending consultations and legislative approval.
“This is not merely about recalculating percentages,” Shehu emphasized. “It is about safeguarding Nigeria’s federal balance and giving every level of government the resources it needs to truly deliver development.”
