RMAFC Begins Revenue Allocation Review Through Nationwide Data Verification Exercise

By Olumide Johnson

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), led by Dr. Mohammed Bello Shehu, Chairman of the Commission, has commenced a nationwide data verification exercise beginning with the South-East geopolitical zone as part of the ongoing review of Nigeria’s revenue allocation formula. Represented by Mrs. Omowumi Ogunlola, Commissioner representing Ekiti State, Shehu stated that the exercise is designed to validate and update critical socio-economic indicators used in determining how federally collected revenues are shared among the federal, state and local governments. The verification teams will engage ministries, departments and agencies as well as local government authorities to ensure the collection of accurate and current data. The exercise follows the federal government’s directive for comprehensive due diligence in developing a new revenue allocation formula and comes as the commission moves into an advanced stage of its review process.

According to Shehu: “Over time, socio-economic realities evolve. Population dynamics change, infrastructure expands, development gaps shift, and new challenges emerge. It therefore becomes imperative that the data underpinning these indices are periodically verified and updated to reflect present-day realities.”

Responding, Alex Otti, Governor of Abia State, pledged full cooperation with the exercise while cautioning that revenue generation should ultimately receive greater attention than revenue sharing.

Otti stated: “Resource distribution and allocation are important, but resource generation is even more important. There may come a time when there will be little or no oil revenue to share.”

DECISION HIGHLIGHT

The RMAFC is attempting to recalibrate Nigeria’s fiscal federalism framework by updating the data foundations upon which revenue sharing decisions are based.

DECISION MEMO  

The verification exercise is not merely a statistical exercise. It represents the most consequential stage of a broader debate over fiscal equity, resource distribution and economic realities within Nigeria’s federation.

Nigeria’s current revenue allocation formula has remained largely unchanged despite significant shifts in demographics, infrastructure development, urbanisation, economic activity and security conditions across states and local governments. As a result, questions have increasingly emerged regarding whether existing allocation indices accurately reflect contemporary realities.

The commission’s decision to undertake field verification suggests recognition that revenue-sharing outcomes are only as credible as the data upon which they are built. Population patterns have evolved, economic centres have shifted, infrastructure footprints have expanded and development disparities have changed. Any formula intended to promote equity must therefore be anchored on updated evidence rather than historical assumptions.

The exercise also reveals a deeper policy tension. While the commission focuses on improving allocation fairness, Otti’s intervention shifts attention towards revenue generation. His argument reflects a growing concern among subnational governments that debates over distribution may become less relevant if dependence on federally collected oil revenues continues amid global energy transition pressures.

The comments highlight two competing but complementary dimensions of fiscal reform. One focuses on how national revenue should be shared. The other focuses on how additional revenue should be created.

The reference to digitised data collection processes and earlier training of state and local government officials indicates that the commission is attempting to strengthen institutional credibility and minimise disputes that often accompany revenue allocation reviews.

Ultimately, the exercise signals that fiscal federalism in Nigeria is gradually moving from political negotiation towards evidence-based recalibration.

DATA BOX

Institution

• Revenue Mobilisation Allocation and Fiscal Commission

Exercise

• Nationwide data verification exercise
• Initial coverage: South-East geopolitical zone
• Objective: Revenue allocation formula review

Key Activities

• Data validation
• Index review
• Stakeholder engagement
• Field verification
• Digitised data collection

Revenue Allocation Beneficiaries

• Federal Government
• State Governments
• Local Governments

Historical Reform Milestones

• State and local government data management training: 2022
• Digitisation of data collection systems completed subsequently
• Federal Government directive for new allocation formula review: 2025

Abia State Indicators Highlighted

• Approximately 35% of annual budget allocated to education and healthcare
• Internally generated revenue more than tripled over three years

WHO WINS / WHO LOSES

Winners

• States whose current realities may be underrepresented in existing allocation indices.
• Local governments benefiting from more accurate data representation.
• Policymakers seeking evidence-based fiscal reforms.
• Citizens if resource allocation becomes more equitable.

Potential Losers

• Jurisdictions benefiting disproportionately from outdated allocation metrics.
• Stakeholders resistant to changes in revenue-sharing outcomes.
• Governments overly dependent on federal allocations without expanding internal revenue sources.

POLICY SIGNALS

• Fiscal federalism reform remains an active government priority.
• Data quality is becoming central to public finance decision-making.
• Revenue allocation reviews are increasingly evidence-driven.
• Government is seeking greater legitimacy for future allocation outcomes.
• Internal revenue generation is emerging as a parallel policy priority alongside revenue distribution.

INVESTOR SIGNAL

For investors, the exercise signals efforts to improve fiscal transparency and strengthen the institutional foundations of intergovernmental finance. A more credible revenue allocation framework can improve subnational planning, budgeting and fiscal stability. The broader discussion around internally generated revenue also points towards a future in which states may become less dependent on federal transfers and more focused on developing sustainable economic bases.

RISK RADAR

• Political disputes arising from revised allocation outcomes.
• Resistance from beneficiaries of existing formula arrangements.
• Data integrity challenges across multiple jurisdictions.
• Delays in translating verification results into a revised formula.
• Continued dependence on oil-derived revenues despite reform efforts.
• Potential divergence between fiscal equity objectives and political realities.

The strategic significance of the exercise lies not simply in updating allocation data but in redefining the foundations of Nigeria’s fiscal architecture. The emerging policy debate is increasingly shifting from how revenue should be shared to how sustainable revenue can be generated in an economy preparing for a future beyond oil dependence.