The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has completed its review of Nigeria’s revenue-allocation formula, bringing the federation closer to a consequential—and potentially explosive—redistribution of fiscal power.
RMAFC Chairman, Dr Mohammed Bello Shehu, said the exercise produced a harmonised report and legislative proposals after consultations with the three tiers of government, technical stakeholders and Nigerians across the country.
His remarks were contained in a statement issued in Abuja by the commission’s Head of Information and Public Relations, Hajia Maryam Yusuf. The proposed percentages were not disclosed.
That omission leaves Nigeria’s defining fiscal question unanswered: who will receive a fair deal, and who could emerge with a raw deal?
Completion of the review does not automatically change the existing formula. RMAFC’s recommendations must pass through the appropriate executive and legislative processes before becoming operational. Between technical recommendation and legal adoption lies a fierce contest involving federal power, subnational survival, resource ownership, regional equity and political interest.
Fairness means different things to different tiers
Revenue allocation has two principal dimensions. The vertical formula determines how Federation Account revenue is divided among the Federal Government, states and local governments. The horizontal formula determines how the shares belonging to states and councils are distributed among them.
Every increase for one tier necessarily reduces what remains for the others.
The Federal Government will argue that national security, debt obligations, major infrastructure, foreign affairs and other sovereign responsibilities require considerable funding. It receives a raw deal if its obligations remain unchanged while its revenue share is sharply reduced.
Yet states and local governments can equally argue that they deliver many of the services citizens encounter daily—schools, primary healthcare, sanitation, local roads, markets, water and community infrastructure.
The federation gets a raw deal when revenue remains concentrated at the centre while service-delivery responsibilities increasingly fall on governments closer to the people.
States: equality versus economic effort
State governments could be the most visible beneficiaries of a more decentralised formula. But fairness among states is considerably more complicated than raising their collective share.
A formula weighted heavily towards equality can support national cohesion and help poorer states meet minimum service standards. It may, however, be viewed as unfair by states with larger populations, greater infrastructure pressure or stronger contributions to national economic activity.
Conversely, giving greater weight to internally generated revenue could reward enterprise and fiscal discipline but punish states with smaller commercial bases, difficult terrain or historical infrastructure deficits.
The answer should not be dependency disguised as equity—or prosperity penalised in the name of balance. A credible formula must protect minimum national standards while rewarding states that expand their economies, formalise businesses and improve revenue administration.
Local governments: a deal on paper?
Local councils may secure a larger nominal allocation, but that does not guarantee better outcomes for communities.
Without financial autonomy, transparent budgets, audited accounts and direct citizen oversight, increased allocations could be captured before they reach primary healthcare centres, classrooms, rural roads and sanitation systems.
For Nigerians at the grassroots, a fair deal is not a higher percentage written into legislation. It is a functioning clinic, a passable road and accountable local leadership.
Local governments would receive the rawest deal if their constitutional share increased while their effective control over the money remained weak.
Producing states and communities
The Constitution requires that derivation remain at no less than 13 per cent of revenue accruing directly from natural resources. This makes accurate asset location and production data central to fiscal justice.
RMAFC said geospatial mapping and inter-agency verification helped resolve long-running oil-well attribution disputes. Seventeen wells were reassigned from Imo State to Rivers State in compliance with a Supreme Court judgment. Similar interventions occurred in Cross River, Akwa Ibom, Imo and Anambra, while improved gas reporting enabled Enugu and Kogi states to receive derivation revenue.
For producing states, correct attribution is a fair deal. But resource-bearing communities may still receive a raw deal if derivation revenue is absorbed into state budgets without visible improvements in polluted, displaced or infrastructure-deficient host areas.
Fiscal justice must reach the communities carrying the environmental and social costs of extraction—not stop at state capitals.
Citizens and public office holders
RMAFC has also completed remuneration reviews for political, public and judicial office holders. The judicial review culminated in the Judicial Office Holders Salaries and Allowances Act, 2025, while a Political and Public Office Holders Salaries and Allowances Bill, 2026 is expected to reach the National Assembly.
Competitive remuneration can strengthen judicial independence, attract competent public officials and reduce vulnerability to corruption. But higher pay becomes a raw deal for taxpayers if it is not accompanied by stronger performance, full disclosure of allowances and consequences for misconduct.
As Shehu acknowledged, improved remuneration must deliver improved service. Citizens should not finance first-class compensation for third-rate governance.
Political and economic implications
The proposed formula could become a major political fault line ahead of the 2027 general elections. Governors will demand larger subnational shares; federal institutions will defend national obligations; producing states will press derivation claims; and less-endowed states will resist any arrangement that weakens fiscal equalisation.
The President and National Assembly must prevent the process from becoming a regional auction in which political influence outweighs evidence.
For businesses and investors, the outcome will affect state liquidity, infrastructure spending, contractor payments, public-private partnerships and subnational borrowing capacity. Predictable allocations can improve project bankability. Abrupt losses could destabilise budgets and increase payment risk.
Transition provisions will therefore be essential.
Nigeria must also enlarge the revenue pool. RMAFC’s collaboration with NUPRC, NNPCL, NMDPRA, the National Boundary Commission and Office of the Surveyor-General can strengthen monitoring, while engagement with the Ministry of Defence targets oil theft, vandalism and production losses.
A perfect sharing formula cannot create prosperity from revenue that has already been stolen or never collected.
Brand implications
RMAFC’s brand must be that of an independent fiscal referee—not an institution announcing decisions behind closed doors.
Its investment in data systems, geospatial verification, staff capacity and media engagement is positive. Mr Ismail Agaka, Chairman of the Public Affairs and Communication Committee, rightly acknowledged the media’s role in democratic accountability.
But institutional credibility will ultimately depend on publishing the formula, methodology, data sources and projected consequences for every tier and state.
BRANDECONOMY Insight
No stakeholder should be asked to accept a “fair deal” on trust alone.
RMAFC should release a comprehensive Fiscal Impact Statement showing what every tier, state and local government would receive under the proposed formula compared with the existing arrangement. It should explain the weights assigned to population, equality, landmass, revenue effort, infrastructure and development needs.
The reform should establish three guarantees: minimum funding for essential public services, incentives for subnational economic productivity and transparent benefits for resource-producing communities.
Most importantly, additional revenue must carry additional accountability.
If the RMAFC review merely redistributes money among political institutions, Nigerians may remain the ultimate losers. If it connects revenue to responsibility, performance and measurable development, the federation itself will receive the fairest deal of all.
