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President Goodluck Jonathan
President Goodluck Jonathan
Yoruba socio-political and economic group, Afenifere Renewal Group (ARG), has said a justified revenue allocation formula will go a long way in quelling some of the problems agitating the country, stressing that it is in support of a formula that will give 65 percent to states and 35 percent to the Federal Government and zero allocation to Local Governments.


The group’s National Chairman, Hon. Olawale Oshun made the revelation while presenting the group’s position on the proposed new Revenue Allocation Formula at the public hearing organised by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) for the southwest zone in Ibadan.


According to him, many agitations in the country, which are gradually building up into overwhelming security challenges, could have been better contained if revenue sharing formula and other fiscal policies had been genuinely and proactively managed to address the nation’s plurality.
He therefore urged RMAFC to see itself as having a crucial role to play in rescuing the nation from the precipice, by ensuring the ongoing review produce a formula that reflects true federalism.

During the presentation, Oshun said people’s needs could only be addressed by local administrations and the federal government therefore must not be allowed to hold on to 52 per cent of revenue accruing into federation account.

“There are about 193,000km or roads in Nigeria, of which only 34,000km are federal roads. The larger burden of road maintenance falls on states. There are about 1000 secondary schools in Lagos State, out of which about 10 belongs to federal government. Again, we can see that the need is at state levels. The same can be said for health facilities.
“So, federal government’s allocation must be reduced and some of its responsibilities must devolve to states, whose percentage allocation must be increased to allow for purposeful governance, ” he said.

The group proposed a sharing ratio of 35:65 between federal government and states, respectively arguing that there is no need to allocate anything to local government, which are entirely under state governments.The group also recommended how best to decentralise Federal Government’s responsibilities.


“ARG suggests this can start, for example, with the federal ministry of agriculture and water resources. Land, which is a major factor of agricultural production, is vested in states. Therefore, states are in better positions to implement agricultural policies than the Federal Government. ARG recommends that such ministries’ portfolios should be altered to retain only their research and policy functions. Then, their allocations can be turned into a Conditional Grant Scheme for states willing to buy into federal government’s policies. The same approach can be applied to decentralise the delivery of major public services, such as education, health and social services. This approach stands to benefit from the efficiencies associated with local administrations while serving important national objectives.”

The group also said special fund has had no desirable impact and should therefore be cancelled. If need for such arises, federal government and appropriate state government(s) can decide on counterpart funding arrangement.
The group also recommended that Derivation be increased from 13 percent to 25 and argued that derivation principle should also be applied to the sharing of other taxes like VAT etc.

To bridge developmental gap among states and ensure that social development is fairly and evenly distributed, ARG suggested an equalisation fund into which state governments will pay an agreed percentage of their IGRs. The fund will be “accessible by poor states only as a conditional grant for the purposes of social development projects.”

Decrying lack of accountability, the group canvassed for independence of RMAFC and urged it to ensure that all revenues are brought into federating account as against a situation, whereby some agencies defray their collection cost and even refuse to remit appropriate amount to federation account .


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