Recent calls by state governments for a neutral body to be responsible for sharing the revenue accruing to the federating units of Nigeria can work only through a constitutional review, immediate past Minister of Finance, Mrs. Nenadi Usman has said.

 

Under the current revenue formula for the country, the federal government gets 52.68%, the 36 states get 26.72%, while the 774 local governments get 20.6% of the amount in the federation account.

 

Additionally, the nine oil-producing states also receive a 13% derivation of oil revenue accruing from their domain.

 

Usman was reacting Tuesday night to the demand by the 36 governors in the country that a neutral body, preferably the Revenue Mobilization, Allocation and Fiscal Commission (RMAC) be appointed to share the revenue that accrues to the federation as against the current arrangement where the federal government takes the lead in determining what amount is shared every month.

 

The governors alleged that the federal government was not being open and sometimes does not carry them along in the revenue sharing process.

 

She said the governors would have to call for the amendment of that part of the constitution if they want to achieve their goal.

 

“I do know that the Federation Account as it is constituted, all the members are statutory members that are stated clearly in the relevant Laws. If they (the governors) are able to have it changed, why not?” she said

 

Usman was speaking at a send-forth dinner organized for her and the immediate past Minister of State for Finance, Engr. Elias Mbam.

 

“We (referring to the Federal Government) have nothing to hide and no matter who shares the money, at the end of the day it will still be shared and the indices cannot be changed on the day you share the money because they are usually laid down by the Fiscal Commission.” She said.

 

During the Olusegun Obasanjo administration, under which Usman served as Minister of State, and later Minister of Finance, there were constant disagreements between the state governments and the federal authorities over the sharing of Nigeria’s excess crude oil revenue. The amount arose from the higher prices of oil over the benchmark price used in the national budget projections.

 

There have been allegations that some state governors and local government councils have not made efficient use of the funds allocated to them.

 

“The danger in having a neutral body determine the sharing of the funds is that it defeats the purpose of the Central Bank of Nigeria, which has the duty to ensure macroeconomic economic stability in the country,” says an official for the bank, who spoke under the condition of anonymity.

 

According to the CBN official, Nigeria has several autonomous sources of funds into the economy that have no bearing on the level of economic activities, and if these are not controlled, they exert pressure on the price level.

Efforts to get the RMAFC to respond to the minister's comments were unsuccessful.