By Obinna Uballa
President of the Capital Market Academics of Nigeria, Prof. Uche Uwaleke, has called for an upward review of the revenue allocation to states, arguing that subnational governments now shoulder greater responsibilities than ever before.
Speaking on Arise TV Morning Show on Thursday, Uwaleke said the current vertical revenue-sharing formula, which allocates 52.68% to the Federal Government, 26.72% to states, and 20.60% to local governments, is outdated and inequitable.
The formula, set in 1992, is now under review by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC).
While clarifying widespread misconceptions about the federal government’s share, Uwaleke explained, “The subnationals should get more, but it is important to point out that the federal government does not get 52.6%. What enters the Consolidated Revenue Fund is 48.5%.
“The remaining 4.18% is for special funds, 1% for FCT, 1.68% for natural resources development, 0.5% stabilization fund, and 1% ecology. Most of these are held in trust for the subnationals.”
Despite this clarification, Uwaleke argued that the 48.5% retained by the federal government remains excessive, especially when compared with similar federations.
“Take India, for example. The central government gets less because 41% of their allocation goes to states, as recommended by their finance commission. In Nigeria, states get only 26.72%, which is inadequate considering the growing responsibilities imposed on them.”
According to Uwaleke, states now play a greater role in infrastructure delivery, including power projects and railways, which justifies increased funding.
“The more responsibilities you saddle a tier of government with, the more resources you must allocate. It’s common sense,” he said.
However, he cautioned that any increase should be ring-fenced for specific projects rather than left to the discretion of state governments.
“If we just add 5% and let it flow into state accounts, it will be spent at the whims of politicians. The funds should be tied to projects like infrastructure, education, or healthcare, similar to how natural resource funds and stabilization funds are managed.”
The call comes as RMAFC begins its long-overdue review of the revenue-sharing formula, alongside plans to review salaries of political office holders.
At a press briefing on Monday, RMAFC Chairman Mohammed Shehu said the current salaries, which is unchanged since 2008, are “inadequate and outdated.” He revealed that President Bola Tinubu earns N1.5m monthly, while ministers earn less than N1m.
This disclosure sparked backlash from labour unions and opposition parties. The Nigeria Labour Congress (NLC) condemned the move as insensitive, saying it ignores widespread poverty and growing inequality.
The Coalition of United Political Parties (CUPP) described the proposed 114% salary hike as “tone-deaf” and urged RMAFC to prioritize the welfare of workers instead.
The African Democratic Congress (ADC) also blasted the plan, calling it “a troubling disconnect between leaders and citizens.”
Critics argue that political office holders already enjoy lavish allowances and perks, far above the N70,000 minimum wage , which many workers do not even receive consistently.
“How else do politicians fund their luxury lifestyles if these salaries are truly inadequate?” asked ADC spokesperson Mallam Bolaji Abdullahi.
