ABUJA — The much-awaited new federal revenue sharing formula among the three tiers of government would be presented to President Goodluck Jonathan in the first quarter of next year.

Chairman of the Revenue Mobilisation, Allocation and Fiscal Commission, RMAFC, Engr. Elias Mbam, disclosed this while fielding questions from journalists, in Abuja, yesterday.

Currently, the formula stands at 52.68 per cent for the Federal Government, states 26.72 per cent, while the local governments are allocated 20.60 per cent.

BY Emma Ujah, Abuja Bureau Chief

In the words of the RMAFC boss, “we will present the proposed formula to the president by the first quarter of 2012. We are conscious of the importance of the revenue formula to all Nigerians and that is why we have taken steps to ensure that we come out with a new revenue formula that the people will be happy with.”

He added that the commission had commenced consultations with stakeholders with a view to receiving necessary inputs into the exercise and that by the beginning of next month, the organisation would call for memoranda from the public.

According to Mbam, his administration was already fully engaged in literature review on the matter with a view to approaching the current exercise from a broad perspective and be well- guided to arrive at the most equitable, fair and just revenue formula.

The RMAFC under the former chairman, Engr. Hamman Tukur, made attempts at reviewing the revenue formula but was either blocked by the government of former President Olusegun Obasanjo or frustrated by the nonchalant attitude of the then members of the National Assembly.

The chairman noted that there was need for a concerted effort towards unlocking the huge revenue potentials in the nation’s non-oil sectors of the economy and that his commission would champion a campaign for the development of such sectors as agriculture, solid minerals mining, manufacturing and tourism.

“It is important to State that the need for the diversification of the country’s resource base especially in the face of the global financial crises cannot be over emphasized. We must also note that apart from the volatile nature of its international market prices, oil and gas resources are exhaustible and non-renewable. Hence the imperative of finding sustainable and dependable means of funding our national development.

“This explains the current efforts of the commission at shifting the focus of the constituent parts of the federation to certain key areas of the economy, particularly the agriculture, tourism, manufacturing and solid minerals sectors which have been neglected over the years and have the potentials of generating substantial revenue for the country”, he said.

Engr. Mbam said there was need for all tiers of government to be committed to diversifying the economy through the provision of legal and regulatory framework, as well as, adequate incentives to attract local and foreign direct investments for the exploitation of national resources in order to boost revenue earnings from the non-oil sectors in the nation’s drive towards achieving the Vision 20-2020.

Until the democratic administration of President Obasanjo in 1999, the military government was using a 1992 formula sharing formula which was as follows: FG 48.5%, State 24%, LGCs 20% and Special fund 7.5% (which was distributed: FCT 1%, Ecology 2%, Stabilisation 1.5% and Natural Resources 3%).

RMAFC’s first proposal under the government of President Olusegun Obasanjo reduced the federal government share from 48.5 % to 41.3%, States 31%, LGCs 16% and Special Funds 11.7% (i.e. FCT 1.2%, Ecology 1%, Natural Resources 1%, Agriculture and Solid Mineral Development 1.5% and Basic Education 7%).

However, before the National Assembly could even debate on that proposal, the Supreme Court verdict on the Resources Control Suit in April 2002 nullified provisions for Special Funds in the Revenue Allocation.

Then President Obasanjo, therefore, quickly took advantage of the situation and came out with the an Executive Order in May 2002 to redistribute the federally collected revenue in which he pushed up the federal government share to 56% and reduced those of states and local government to 24% and 20%, respectively.

Obasanjo’s action elicited an outcry from the public which made him to issue a second Executive Order, two months later, in July 2002, in which he readjusted the distribution.In that second Executive Order, he gave federal government 54.68%, States 24.72% and LGCs 20.60%.

The current formula is the outcome of a letter in March 2004, when the then Minister of Finance, and current Coordinating Minister of the Economy and Minister of Finance, Dr. Okonjo Iweala modified the second Executive Order reducing the federal share from 54.68 % to 52% and slightly increased that of the states from 24.72% to 26.72% and local government remained at 20.60 %.

The revenue commission made about three attempts to give the nation a new revenue formula but was unsuccessful. At a point then President Obasanjo had to withdraw a formula from the National Assembly on the excuse that there were fake formula Bills in the legislature.