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The Promise of a New Revenue Formula

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By Salisu Na’inna Dambatta

It is interesting that a new Revenue Sharing Formula by the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC) will be worked out soon to replace the 20-year old existing version.

The Chairman of the Revenue Mobilization Allocation and Fiscal Commission, Mr.

Elias Mbam said that in addition to a new sharing formula, the Commission will “expand the sources of revenue for the Federation.

“I intend to do this through diversification in areas outside Oil and Gas, and that includes solid minerals, agriculture and manufacturing.”

There is no doubt that the existing renenue allocation formula has been subjected to criticisms by politicians and development experts who believe that the 52.

68 per cent allocated to the Federal Government; the 26.72 per cent to the States and 20.60 per cent for  the 744 Local Government Areas in the country is due for retouching.

However, it is important to note that in the Nigerian peculiar way of doing things, every Revenue Allocation formula, from the first one introduced in 1948 (on the recommendation of Hicks Philipson Commission of 1946) as part of the Richardson Constitution for the three regions of Nigeria to the extant version, has always been criticised or opposed by people who expressed their various perspectives on how the formulae should have been formulated.

It is to tamper those varied perspectives with reasoning that a framework, based on over a dozen of factors or indices, was developed to accommodate various interests and address divergent concerns and foster national acceptance for it.

The indices in the framework listed by  Victor I. Lukpata, Ph.D of the Department of History and Diplomatic Studies, Federal University Wukari, Taraba State, are: Basic needs; Minimum Material Standards; Balanced Development; Derivation;Equality of Access to Development Opportunities;Independent Revenue/Tax effort;Absorptive Capacity and Fiscal Efficiency. Others are Minimum responsibility of Government; Population; Social Development Factor; Equality of States; Landmass and Terrain and finally, Internal Revenue Generation Effort.

The above principles have continued to serve as the yardstick for revenue allocation up to this day.

Each state of the Federation,  the 744 Local Government Areas and the Federal Government get a portion from the Federation Account based on these indices. On its part, the Federal Government gets the portion assigned to it because of the huge responsibilies it bears: ensuring national security, caring for the Armed Forces, the Police Force, Foreign Relations, building and maintenance of the most critical roadways, the railways, internal and international maritime services, Customs, Education, Health, Agriculture and National Food Security and the provision of many more money-guzzling public goods nationwide.

In the process of sharing the revenue, the Federal Ministry of Finance chairs the Federation Account Allocation Committee (FAAC) every month. The Secretariat of FAAC is at that Ministry, but the Department of FAAC is domiciled in the Office of the Accountant-General of the Federation (OAGF).

The Commissioners for Finance of the 36 states, a representative of the Federal Capital Territory, Abuja, are members of FAAC, as are revenue-related entities including the RMAFC, the Nigerian National Petroleum Corporation (NNPC), the Nigeria Customs Service (NCS), the Federal Inland Revenue Service (FIRS).

Much is at stake when it comes to revenue sharing. The quantam of money involved makes it so as the following facts reflect. The sum of N8 trillion was shared in 2018 in spite of the shut-ins in several oil installations. The Federation Account Allocation Committee (FAAC) disbursed a total sum of N6.418 trillion in 2017. It was N5. 1 trillion in 2016 and N6. 011 in 2015 respectly.

Every state in the country, except two, get most of the cash they use in paying  for the services and development projects they deliver to the public from FAAC disbursements. Their internal revenue generation ability is limited by many factors, including lack of seriousness.

That lack of seriousness led to paucity of funds in the states to the extent that workers could not be paid their monthly entitlements. The federal government lent the states just over N2 trillion, beside paying them billions of Naira in refund regarding Paris Club debt write-off in favour of Nigeria.

Given the life-line status of shared revenues for the three tiers of Government in the country, a promise to craft a new Revenue Sharing Formula for the country by the RMAFC is an exciting matter. So, the nation is eagerly awaiting  the new formula, which will ensure that the Federal

Government gets enough resources to provide the kind of services expected from the Centre.

 However, it is possible to expand and further diversify the revenue base. The Federal Inland Revenue Service has demonstrated that by bringing more taxables to the tax net. 

Indeed, the FIRS has announced that it is now targeting a tax base of 45 million taxables, according to the Executive Secretary, Joint Tax Board (JTB), Mr Oseni Elamah.

Elama said that as at December, 2018, Nigeria’s tax payers data base expanded from 20 million (in 2015) to 35 million. This is a huge increase by any measure.

The taxpayers base can actually surpass the 45 million target if the over 1,000 uncaptured sources of tax identified by researchers commissioned by the Federal Ministry of Finance are brought into the tax net. This was disclosed by former Minister for Finance, Mrs. Kemi Adeosun in a speech in Kano on July 14, 2016 at a Conference on Taxation and Revenue generation.

“Minister of Finance, Mrs. Kemi Adeosun in Kano said the Federal Government had identified more than 1,000 dormant revenue lines, assuring, however, that such huge dormant revenue opportunities will be maximised,” a medium reported.

The RMAFC should in collaboration with other relevant sister agencies take advantage of the work done earlier in its Chairman’s drive to expand the revenue base for the three tiers of Government. It is a desirable and doable task.

The Muhammadu Buhari-led administration will simply add another important achievement in the huge legacy it will leave behind for the benefit of future generations of Nigeria if the revenue sharing or allocation formula is redesigned and dormant revenue-yielding lines are activated.

Economy

Imo records over $1m from non-oil exports in 2025 – NEPC

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The Nigerian Export Promotion Council (NEPC) says exporters in Imo generated a total of 1,244,095 dollars as proceeds from export trade in 2025.

The Imo Coordinator of the council, Mr Anthony Ajuruchi, disclosed this during a follow-up engagement with cocoa farmers in the state on Thursday in Owerri.

50 cocoa farmers and exporters in Imo received 30 cocoa seedlings each in 2025 as part of interventions to boost production for export.

Ajuruchi said the amount was derived from proceeds of both formal and informal export transactions carried out by the farmers within the 2025 fiscal year.

He commended the Executive Director of NEPC, Mrs Nonye Ayeni, and the management team for their support and commitment to the growth of the export market in Imo and across the country.

According to him, the council recorded notable achievements in 2025, including the organisation of capacity-building programmes on non-oil export, product packaging and labelling.

“In addition to our interventions for cashew farmers, we conducted trainings on product development and adaptation, export contracts, market penetration, product certification and export documentation procedures.

“We also trained about 600 exporters and small and medium-scale enterprises,” he said.

Ajuruchi said the engagement with the cocoa farmers was aimed at obtaining feedback and brainstorming on strategies to increase production and export volume in 2026.

One of the beneficiaries, Mrs Sophia Orji, said the cocoa seedlings she received were doing well and had started fruiting after 17 months.

Another farmer, Mrs Mary Okeke, said her cocoa plants were thriving and appealed to NEPC to extend similar support to farmers during the rainy season.

Also speaking, Mr Canice Nze, Director of Produce in the Imo Ministry of Trade, Commerce and Investment, urged the farmers to register with the ministry to enable them benefit from cooperative structures and access possible government grants. (NAN)

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Economy

NCC, CBN Approve Refund Framework for Failed Airtime and Data Transactions

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By David Torough, Abuja

In line with the consumer-focused objectives of the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN), the two regulators have drawn up a framework to address consumer complaints arising from unsuccessful airtime and data transactions during network downtimes, system glitches, or human input errors.

The framework is the outcome of several months of engagements involving the NCC, the CBN, Mobile Network Operators (MNOs), Value Added Service (VAS) providers, Deposit Money Banks (DMBs), and other relevant stakeholders.

According to the NCC, these engagements were prompted by a rising incidence of failed airtime and data purchases, where subscribers were debited without receiving value and experienced delays in resolution.

“The Framework represents a unified position by both the telecommunications and financial sectors on addressing such complaints. It identifies and tackles the root causes of failed airtime and data transactions, including instances where bank accounts are debited without successful delivery of services. It also prescribes an enforceable Service Level Agreement (SLA) for MNOs and DMBs, clearly outlining the roles and responsibilities of each stakeholder in the transaction and resolution process,”  a statement by Head of Public Affairs of NCC, Nnen Ukoha said.

Under the new framework, where a purchaser is debited but fails to receive value for airtime or data—whether the failure occurs at the bank level or with an NCC licensee—the purchaser is entitled to a refund within 30 seconds, except in circumstances where the transaction remains pending, of which the refund can take up to 24 hours.

The framework further mandates operators to notify consumers via SMS of the success or failure of every transaction. It also addresses erroneous recharges to ported lines, incorrect airtime or data purchases, and instances where transactions are made to the wrong phone number.

  Director of Consumer Affairs at the NCC, Mrs. Freda Bruce-Bennett in a comment on the development said   the framework also establishes a Central Monitoring Dashboard to be jointly hosted by the NCC and the CBN. According to her, the dashboard will enable both regulators to monitor failures, the responsible party, refunds, and track SLA breaches in real time.

“Failed top-ups rank among the top three consumer complaints, and in line with our commitment to addressing these priority issues, we were determined to resolve it within the shortest possible time,” she said.

“We are grateful to all stakeholders—particularly the Central Bank of Nigeria and its leadership—for their tireless commitment to resolving this issue and arriving at this framework, and for ensuring that consumers of telecommunications services receive full value for their purchases.

“So far, pending the approval of management of both regulators on the framework, MNOs and banks have collectively made refunds of over N10 billion to customers for failed transactions” she explained .

Mrs. Bruce-Bennett further noted that implementation of the framework is expected to commence on March 1, 2026, once the two regulators have made final approvals, and technical integration by all MNOs, VAS providers and DMBs is concluded.

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Business News

Budget Office Defends Tax Reform Acts, Seeks Due Process

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By Tony Obiechina, Abuja 

The Budget Office of the Federation has reaffirmed the integrity of Nigeria’s newly enacted Tax Reform Acts, cautioning against what it described as governance by speculation and unverified claims following allegations of post-passage alterations.

In a statement on Wednesday, the Budget Office said it had taken note of concerns raised by the Minority Caucus of the House of Representatives, stressing that the sanctity of the law is central to constitutional democracy and not a mere procedural formality.

According to the Office, any suggestion that a law could be altered after debate, passage, authentication, and presidential assent without due process would strike at the core of the Republic and undermine citizens’ right to be governed by transparent and stable laws.

However, it warned that democratic integrity is also endangered by the careless amplification of unverified claims. “A nation cannot be governed by insinuation or sustained on circulating documents of uncertain origin,” the statement noted, adding that public confidence, once shaken by speculation, is often difficult to restore.

The Budget Office emphasized that both government and citizens share a common interest in truth, clarity, and due process, noting that public finance depends heavily on trust in the legality and clarity of fiscal laws. It welcomed the decision of the National Assembly to investigate the allegations, describing institutional inquiry, not conjecture as the appropriate response to claims of illegality.

On public access to the law, the Office agreed that Nigerians and the business community are entitled to clear and authoritative texts of all laws they are required to obey. It clarified, however, that the authenticity of legislation is determined by certified legislative records and official publication processes, not by informal or viral reproductions.

The statement also underscored the importance of separation of powers, warning that claims suggesting Nigeria is being governed by “fake laws,” if not backed by established facts, risk eroding confidence in democratic institutions.

 At the same time, it stressed that legislative scrutiny should not be dismissed by the executive, noting that oversight is a constitutional duty, not an act of hostility.

From a fiscal perspective, the Budget Office said legal certainty is essential for revenue projections, macroeconomic stability, budget credibility, and investor confidence. While it is not the custodian of legislative records, it maintained that uncertainty around operative tax provisions directly affects economic planning.

To restore confidence, the Office proposed a set of measures, including the publication of verified reference texts in a single public repository, orderly access to Certified True Copies for stakeholders, clear public explanations where discrepancies are alleged, and strict alignment of all implementing regulations with authenticated legal texts.

Addressing calls for suspension of the tax reforms, the Budget Office cautioned against allowing prudence to slide into paralysis. It argued that properly implemented tax reform is necessary to reduce dependence on borrowing and inflationary financing, while easing indirect burdens on vulnerable citizens.

“Where clarification is required, it must be provided; where correction is required, it must be effected; where investigation is required, it must proceed,” the statement said, adding that governance and reform should not be stalled by unresolved conjecture.

The Office concluded by describing taxation as a democratic covenant that binds citizens and the state, insisting that compliance depends on transparency and trust. It called on political actors to protect institutions as much as positions, urging citizens and businesses to rely on verified sources and resist the spread of unauthenticated information.

The statement was signed by Tanimu Yakubu, Director-General of the Budget Office of the Federation, who reaffirmed the agency’s commitment to fiscal transparency, institutional integrity, and reforms that advance national prosperity while safeguarding citizens’ rights.

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