Thread by @yinkanubi

There are 3 main elements I think we need to consider.

1. You can't discuss the review of the current revenue sharing formula without discussing the restructuring of Nigeria. To achieve an equitable formula along the lines of your argument will require a constitutional amendment

https://twitter.com/fimiletoks/status/1487372340929384452

Why do I say so? Just look at the 2nd Schedule of the Nigerian constitution which contains 68 items on the Exclusive Legislative List, as against 30 items on the Concurrent list. There is no way, you can have an equitable formula without reviewing this list and amending the CFRN.

2. While FG takes 52.68% of revenue, the effective rate is the same rate as 1999 48.5% (CRF). The remaining is allocated:

- FCT 1%
- NRDF 1.68%
- Ecological Funds 1%
- Stabilization Acc 0.5%

This means the duties of the FG on the exclusive list is funded largely from the CRF.

The FCT is effectively a State. States are also the beneficiaries of the Natural Resources Development Fund and the Ecological Fund used in addressing ecological issues in States.

Any discussion of reviewing the formula must involve discussing responsibility for "Special Issues"

3. The last issue for me as to do with legality. As we speak, Nigeria does not have a constitutionally backed revenue allocation formula. There is history to this. In 1999, the new democratic govt inherited the 1992 formula of

48.5% - FG
24% - States
20% LG
7.5% Special Funds

However, there was a Supreme Court verdict in April 2002 on the Resources Control Suit which nullified provision of Special Funds in any given Revenue Allocation formula. OBJ then invoked an Executive Order in May 2002 to redistribute the formula to reflect the verdict of the SC.

That EO, initially gave FG 56%, States 24% & LGCs 20% but was reviewed to FG 54.68%, States 24.72% & LGCs 20.6% in July 2002 after an outcry. In March of 2004, the EO was modified again increasing state allocation to 26.72% & reducing FG to 52.68%. This is the formula used since.

In effect, the current revenue formula used for allocation of revenue is not based on any constitutional provision but on an 18 year old Executive Order review thrice in two year.

This is why I believe restructuring our Fiscal Federalism must precede review of revenue formula.

In conclusion, I do believe we need to review the revenue allocation formula and find an equitable rate along the lines of the SC Judgment. But I also believe that before we do that, we need to redefine our concept of Federalism in fiscal terms and enshrine it in the constitution

We also need to be careful what we wish for because a review along these lines might lead to inequalities among sub-nationals that may lead to internal migration which will put more pressure on the resources of some States. We are after all a Federation and not a Confederation.