The Federal Government will continue to have the highest take in earnings if the National Assembly endorses a proposed Revenue Allocation Formula when it resumes next month. However, while State Governments receive an upward gain under the planned formula, the Federal Government and particularly the Local Governments have their shares from the Federation Account reduced. The formula, the product of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), has been handed over to the Senate President, David Mark.

Chairman of the RMAFC, Hamman Tukur, said that under the proposed formula, the Federal Government would get 53.69 percent, the 36 State Governments 31.10 percent while the 774 Local Governments in the country are to share 15.21 percent. The three tiers had received 48.5 percent, 24 percent and 20 percent respectively before the Supreme Court put a stop to the formula in 2002 because other areas not recognised by the Constitution were sharing from the Federation Account.
The areas, under the Special Funds heading, were the Federal Capital Territory Development Fund (1 percent); Ecology Fund (2 percent); National Reserve Fund (1.5 percent) and Agriculture, Solid Minerals Development Fund/Technical Research (3 percent).

In compliance with the Supreme Court judgment, the Presidency had issued an Executive Order in May 2002 restructuring the formula, thus giving 56 percent to the Federal Government, 24 percent to States and 20 percent to Local Governments. Another Executive Order in July 2002 altered the formula and gave the Federal Government 54.68 percent, States 24.72 percent and Local Governments 20.60 percent. Yet, in March 2004, the Ministry of Finance issued a letter modifying the second Executive Order. It increased allocation to States to 26.72 percent - an increase of two percent, which was obviously from the two-percent reduction the Federal Government allocation previous allocation of 54.68 percent, which now stands at 52.68 percent. Local Governments had 20.64 percent.

However, in September 2004, the RMAFC submitted a revised formula to former President
Olusegun Obasanjo, but nothing came out of it until the new Bill for a formula was brought to the Senate last week. The proposed formula is not different from the one the RMAFC gave to Obasanjo three years ago. The Guardian gathered that the Federal Government allocation of 53.69 percent includes Special Fund under its custody and in trust for other tiers. The percentage is to cater for the Federal Government to the tune of 47.19 percent; a General Ecology Fund of 1.50 percent; Solid Mineral Fund 1.75 percent; National Reserve Fund 1.50 percent; and Agriculture Development Fund of 1.75 percent.

To manage the Special Fund it holds in trust for other tiers, the Federal Government and other stakeholders are to set up special body to disburse the funds. It was also learnt that the 6.5 percent built into the Federal Government share is to allow the three tiers of government meet special needs while avoiding the errors that led to the Supreme Court judgment of 2002. In the meantime, to share the allocations at the State Government level, the following horizontal formula has been proposed: Equality, 45.23 percent; Population, 25.60 percent; Population, density, 1.45 percent; Internal Revenue Effort, 8.31 percent; Landmass, 5.35 percent; Terrain, 5.35 percent; Rural
Road/Inland Water Way, 1.21 percent; Potable Water, 1.50 percent; Education, 3.00 percent; and Health, 3.00 percent.

The Horizontal Allocation Formula presently in use is Equality, 40.00 percent; Population, 30.00 percent; Internal Revenue Effort, 10.00 percent; Landmass & Terrain, 10.00 percent; Education, 4.00 percent; Health, 3.00 percent; and Water 3.00 percent. While presenting a Bill on the formula to Mark last week, Tukur, an engineer, lamented that the Revenue Formula that had been in operation was a mere ministerial circular contrary to the provisions of the Constitution on the enactment of revenue formula.

His words: "Throughout the eight years of democracy, one would expect that the National Assembly would have made history by associating its name with a revenue formula for the entire 140 million Nigerians.
"We have had democracy for the past eight years and the National Assembly have still not deemed it necessary to give the Federal Republic of Nigeria a fair, equitable, just formula for distribution of the enormous resources at our disposal.
"Within these eight years, the main commodity that gives us this resources is the oil and the proceeds have been very good. But do you know sir that the formula being used now is by a mere circular by a minister.
"We are talking about something, which the Constitution stipulates should be done by the National Assembly on the receipt of advice of the RMFC.
"And yet, here we are eight years operating and distributing the total resources of this country by a circular from a minister, a constitutional requirement. And yet we did the formula (and) we presented it to you (National Assembly) in 2002."

Nonetheless, the Senate President has assured that the National Assembly would not fail to address all the issues raised, adding that all relevant stakeholders would be carried along in the process of addressing those sensitive issues. Mark said: "Let me assure you that this Senate would not be scared of visiting any issue that we think is sensitive."There are lots of issues that are considered very sensitive in this country and therefore, they are left dormant. But the result is that it is driving the country in a direction that is not very comfortable. "This Senate will not be scared of visiting any issue at all. We will make sure that all the stakeholders are involved in any issue that is sensitive. The revenue allocation formula is one of those issues."

On the share of Local Government Areas from State revenue, Mark said it was the desire of the Senate to legislate in such manners that would lead to substantial improvement in the living standards of Nigerians. He stressed that since the local governments were closer to the people, the Senate would not pay lip service to the issue.