Home Economy Revenue formula review: Gov. Bello proposes 39% to FG, 61% to States, LGs

Revenue formula review: Gov. Bello proposes 39% to FG, 61% to States, LGs

by Business News Report

Gov. Yahaya Bello of Kogi, has called for the review of the revenue-sharing formula with the federal government’s share dropping from 52.68 per cent to 39 per cent. He also proposed that states’ allocation be reviewed upwards from 26.72 per cent to 35 per cent while that of the Local Government Areas be raised from 20.6 per cent to 26.72 per cent. Bello made the proposals while delivering a welcome address at the opening of the North Central Zonal Public Hearing on Review of the Revenue Allocation Formula (RAF) by the Revenue Mobilisation, Allocation And Fiscal Commission (RMAFC).

He said that the review of the formula is now long overdue, stressing that the burden on states is not commiserate with the allocation due to them.

“I urge this assemblage to look critically at the revenue allocation formula currently in use in Nigeria today and isolate the immediate and remote reasons why it has failed to achieve the desired developmental aspirations. To help us chart a new order for current and future development, I suggest a revenue sharing formula of 39 per cent, 35 per cent and 26 per cent for the federal, state and local governments respectively. I believe this new formula is more in keeping with the financial burdens on the various tiers and will improve the nexus between revenue allocation and economic growth in Nigeria. The federal government must now consider relinquishing portions of its share to the other 2 tiers. This is the time to make room for the extra, back-breaking, burden which states bear in catering for its over-bloated workforces, particularly at the third tier, which they cannot retrench,” he said.

Buttressing how unfair the formula is in view of the existential realities between the three tiers of governments, he said that the states, especially at the local level, had too many workforces. Exemplifying with his state, he said that despite a rigourous staff verification exercise to remove ghost workers in his state, LGAs still had 43,788 workers with monthly salary obligation of N3.8 billion. “This is quite different from the N3.206bn I need to settle salaries and remunerations every month at the state level for a workforce which also numbers into tens of thousands. Note that Kogi’s monthly income – allocations from FAAC and JAAC plus our internally generated revenue which this Administration has painstakingly grown about 300 per cent, still hovers around N7 billion.

“The situation is dire and it becomes worse when you add our many other governance responsibilities such as meeting the needs of our people in all sectors – education, health, infrastructure and utilities. Clearly, the case for an enhanced revenue share for the 2nd and 3rd tier of governance has never been stronger. I strongly urge it this is the right thing to do and this is the time to do it,” he said. Gov. Bello added that it is crucial to actualise the progressive agenda of the RMAFC that some measure of equity is implemented in the sharing. He called on the commission to look at the facts which he had raised and activate principles of fairness and then apply them to the Revenue Allocation Formula. 

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