Returning to an old policy memorandum can be a delicate exercise. One may discover that the problems have remained exactly where they were left, only older, larger and now supported by additional committees. Occasionally, however, one finds that government has acted on some of the recommendations. That is the more encouraging discovery, and it deserves acknowledgement before another reform proposal is placed on the national table.
Some years ago, in a memorandum to the Revenue Reform Committee, I argued for stronger coordination of fiscal and monetary policy, simpler taxation, closer monitoring of public revenue, more effective fiscal responsibility rules and a better equipped Revenue Mobilisation Allocation and Fiscal Commission. I also proposed that technology should enable Nigeria to follow public revenue from the point at which it is generated to the point at which it enters the Federation Account.
The policy landscape has since changed considerably.
Nigeria has removed the petrol subsidy, substantially reformed its tax system, consolidated important aspects of tax administration and strengthened the legal framework governing RMAFC. These are significant developments. They show that the reform journey has progressed, although, as with many Nigerian journeys, the passengers are still entitled to ask whether the driver has the complete address.
The Revenue Mobilisation Allocation and Fiscal Commission Act 2025 is particularly important. It strengthens RMAFC’s capacity to demand information, books, documents and returns relating to Federation Account revenue. It requires government agencies to comply with its requests, broadens its monitoring of government receipts and investment income, makes it a statutory member of important fiscal bodies, permits the establishment of state and zonal offices and places its funding on a first line charge, subject to appropriation.
More significantly, the Act creates offences for withholding, delaying, diverting or falsely reporting revenue due to the Federation Account. It also empowers RMAFC to make regulations and issue guidelines for implementing its mandate.
These changes deserve recognition. RMAFC was previously expected to monitor the Federation’s revenue with considerable responsibility but limited enforcement capacity. It sometimes resembled a fiscal referee equipped with excellent eyesight but no whistle. The 2025 Act has now provided at least part of the whistle.
But every successful reform reveals the next question.
The challenge is no longer simply whether RMAFC can identify missing revenue. The deeper question is whether Nigeria has a coherent system connecting revenue mobilisation, revenue allocation, expenditure responsibility, public borrowing, fiscal risk and accountability across all three tiers of government.
At present, it does not.
Nigeria has a constitutional institution with a federation wide outlook but historically limited enforcement reach. It also has a statutory institution established to enforce fiscal responsibility but operating mainly within the federal perimeter. One institution can see across the federation but cannot always reach what it sees. The other can reach more firmly, but within a narrower field.
This is the institutional puzzle presented by RMAFC and the Fiscal Responsibility Commission.
RMAFC is established under the Constitution, with membership reflecting the states and the Federal Capital Territory. It monitors accruals to and disbursements from the Federation Account, reviews the revenue allocation formula and advises the federal, state and local governments on fiscal efficiency and revenue improvement.
The Fiscal Responsibility Commission was established under the Fiscal Responsibility Act 2007 to promote prudent management of public resources, macroeconomic stability, transparency and accountability. It monitors fiscal rules relating to medium-term planning, budgetary discipline, operating surpluses of federal corporations, borrowing, debt and fiscal reporting.
The FRC has useful enforcement powers. It may compel the disclosure of information, investigate suspected violations and refer appropriate cases to the Attorney-General for prosecution. The Act also declares the Commission independent in performing its functions.
Its principal limitation is jurisdiction. Much of its direct operational reach concerns the Federal Government and federal institutions. Certain provisions relating to borrowing and national debt necessarily affect all tiers, but the federal FRC does not generally supervise every aspect of state budgets, internally generated revenue, personnel expenditure and procurement.
States have consequently enacted their own fiscal responsibility or public finance laws. Most states now have some form of fiscal responsibility or debt management legislation, but the institutions, reporting standards and enforcement capacity vary widely. Some have reasonably active systems. In others, the law appears to be observing fiscal responsibility mainly by remaining quietly inside the statute book.
Nigeria therefore has one economy, one Federation Account and one consolidated public debt exposure, but several fiscal responsibility systems operating at uneven speeds.
Fiscal risk, unfortunately, does not always respect constitutional boundaries. When a state accumulates arrears, guarantees unsustainable obligations or approaches a debt crisis, the consequences may eventually affect banks, contractors, workers, pensioners and the Federal Government. At that point, the language of state autonomy is often replaced by the language of intervention, restructuring or bailout.
There is therefore a strong case for bringing the federal fiscal responsibility function under the constitutional umbrella of RMAFC.
The National Assembly could amend or replace the Fiscal Responsibility Act and transfer the present functions of the federal FRC to a specialised Fiscal Responsibility and Revenue Assurance Directorate within RMAFC. That directorate would monitor federal fiscal rules, operating surpluses, public debt disclosures, government guarantees, expenditure arrears, fiscal risks and compliance with national reporting standards.
This would connect four activities that currently travel on parallel roads: revenue mobilisation, revenue allocation, fiscal responsibility and public financial assurance.
But a merger alone would not solve the subnational problem. RMAFC’s constitutional status and representation from the states do not automatically confer unlimited federal authority over state public finance. A representative from a state sitting in a federal commission is not a replacement for the constitutional distribution of legislative powers.
Nigeria should therefore create a National Fiscal Responsibility and Revenue Assurance System anchored by RMAFC but implemented through cooperative federalism.
Under this arrangement, RMAFC would establish common reporting, transparency and assurance standards for matters affecting the federation as a whole. Its specialised directorate would directly enforce federal obligations and requirements connected with Federation Account revenue, federally collected receipts, national borrowing, sovereign guarantees, federal interventions and federal public corporations.
State Fiscal Responsibility Commissions or equivalent bodies would retain responsibility for enforcing state fiscal laws. They would, however, operate within a common national data and reporting framework. Their information on debt, guarantees, expenditure arrears, public corporations, audited accounts and material fiscal risks would feed into a consolidated national fiscal picture.
This would not turn state budgets into appendices of the federal budget. It would simply recognise that one federation cannot safely operate with thirty seven definitions of fiscal transparency.
The Constitution could eventually be amended to authorise RMAFC expressly to prescribe and monitor minimum fiscal responsibility standards throughout the federation. These minimum requirements could cover the timely publication of budgets and audited accounts, disclosure of debts and guarantees, borrowing limits, fiscal risk statements and reporting by public corporations.
States would remain free to adopt stricter standards. The national standard would be the floor, not the ceiling.
The powers to make subsidiary legislation are valuable in this regard. Under the RMAFC Act 2025, the Commission can make regulations and issue guidelines necessary to give effect to the Act. The Fiscal Responsibility Act separately authorises the FRC to make rules for carrying out its functions, while giving the President broader authority to make implementation regulations.
A consolidated framework should give the strengthened RMAFC clear authority to make detailed regulations on revenue reporting, reconciliation, digital access to records, treatment of disputed deductions, fiscal risk disclosure, investigation procedures and administrative compliance.
But regulations cannot perform constitutional magic. Subsidiary legislation may explain how a statutory power is exercised; it cannot create jurisdiction that the Constitution or parent Act has not granted. The foundation must first be properly laid.
The question of independence is equally important.
RMAFC is described as an independent and autonomous institution. Its constitutional status, state representation, protected tenure and first line funding provide significant safeguards. But its independence is not complete.
The President appoints its Chairman, members and Secretary, subject in the case of members to Senate confirmation. Its funding remains subject to appropriation. More importantly, the independence provision in the 2025 Act is framed primarily around appointments and disciplinary control over staff. It does not state as clearly as it might that no person or authority may direct or influence RMAFC’s revenue verification, investigations, certification and regulatory decisions.
The FRC, interestingly, has a more direct statutory declaration that it shall be independent in performing its functions. Nigeria therefore has a constitutional commission with the wider field of vision and a statutory commission with the more emphatic language of operational independence.
Any consolidation should preserve the stronger protection.
A reformed RMAFC must be expressly independent in verifying Federation Account revenue, issuing assurance certificates, investigating non compliance, making regulations within its mandate and referring violations for prosecution. Appointments should be transparent, qualification based and subject to rigorous public scrutiny.
Constitutional status is important, but it does not vaccinate an institution against political influence. Independence must be supported by appointment procedures, secure funding, professional staff, transparent decisions and protection from arbitrary interference.
This leads to another institutional curiosity of why does RMAFC not chair the Federation Account Allocation Committee?
Under the Allocation of Revenue (Federation Account, etc.) Act, the Federal Minister of Finance chairs FAAC. State Commissioners for Finance, the Accountant-General of the Federation and other designated members participate, while the Federal Ministry of Finance also provides the secretariat.
RMAFC is now a statutory member of FAAC, but membership is not leadership. It sits at the distribution table even though the Constitution assigns it responsibility for monitoring the accruals and disbursements being considered at that table.
The Federal Government is a beneficiary of the Federation Account. The states are beneficiaries. Local governments are beneficiaries. Yet the committee overseeing distribution is chaired by the representative of one of the beneficiaries.
This does not establish that the Ministry of Finance has acted improperly. The issue is one of institutional design. A sound system should minimise both actual conflict and the appearance of conflict. The person verifying the cake and presiding over its division should ideally not represent one of those waiting for a slice.
RMAFC is the constitutional institution established to protect the integrity of the Federation Account. It represents the federation rather than a single tier. The stronger arrangement would therefore be for RMAFC independently to certify the distributable revenue and for its Chairman to preside over FAAC.
The Ministry of Finance would participate as the representative of the Federal Government. The states and local governments would have appropriate representation. The Accountant-General of the Federation would prepare the technical accounts and execute the approved payments.
RMAFC should not receive, hold or transfer the money. Its functions should be verification, certification and independent chairmanship. Custody and payment execution should remain with the Accountant-General.
This change would require amendment of the Allocation of Revenue Act, from which the Finance Minister’s chairmanship presently derives. It would not necessarily require a constitutional amendment.
Care must nevertheless be taken to avoid replacing one conflict with another. If RMAFC verifies the revenue, chairs the allocation meeting and later investigates the same distribution, it may be accused of marking its own examination paper.
The answer is internal separation. A professional Revenue Assurance Directorate should conduct the technical verification. FAAC should consider a formally issued revenue assurance certificate. A separate audit or review function should subsequently examine whether the distribution complied with the approved formula and procedures.
RMAFC’s assumption of additional responsibilities must also be judged against its performance of an existing and highly visible mandate: determining the remuneration of political, public and judicial officeholders.
Here, the record is mixed.
RMAFC produced remuneration frameworks in 2000 and 2007. The 2007 review became the foundation of the remuneration law applied for many years. More recently, the Commission completed a judicial remuneration review that resulted in new legislation, while a revised package for political and public officeholders has reportedly reached an advanced stage.
These are important contributions. But the principal political office remuneration structure was based on a review conducted nearly two decades ago. A framework intended to reflect inflation, cost of living, public revenue and government’s capacity to pay cannot remain substantially unchanged for that long and still claim to be regularly calibrated to economic reality.
RMAFC attempted reviews in 2009 and 2015, but they did not complete the legislative and executive process. This was not entirely the Commission’s fault. Its recommendations must pass through political institutions whose members may themselves be affected by the outcome.
The umpire proposes the remuneration rules, but some of the players must approve them before the match can continue.
The greater weakness is the persistent gap between official remuneration and the total public cost surrounding political office.
RMAFC determines salaries and specified allowances. Citizens, however, encounter other payments described as running costs, institutional expenses, vehicle provisions, furniture allowances, duty tour payments, security votes, severance benefits and constituency related expenditure. Some are legitimate costs of running public institutions. Others may duplicate, enlarge or obscure approved personal benefits.
The public is consequently told that official salaries are modest while observing that political offices remain extremely expensive. Both claims may contain some truth because they measure different things.
RMAFC has complained about abuses in implementing its approved remuneration package. But complaints are not a compliance system. There should be a consolidated public register showing the salary, allowances, benefits in kind and permitted institutional expenses attached to every affected office. Government institutions should submit annual certified returns, and RMAFC should publish a national remuneration compliance report identifying unauthorised or unexplained payments.
The Commission should review remuneration at fixed intervals, perhaps every four years, using a published methodology. The framework should distinguish clearly between personal compensation and genuine institutional expenditure. There should be procedures for recovering unauthorised payments and referring deliberate violations for prosecution.
This mixed record does not disqualify RMAFC from taking on a larger role. It does, however, warn against presenting it as a ready made institutional saviour. Before RMAFC absorbs fiscal responsibility functions or chairs FAAC, its independence, technical capacity, internal governance and accountability must be strengthened.
The larger reform should also lead Nigeria towards an annual public sector balance sheet.
Government currently judges its financial condition mainly through revenue, expenditure, deficit and debt. These are important, but incomplete. Nigeria must also know what its governments collectively own, what those assets produce, what they owe, what they have guaranteed and what liabilities are waiting quietly outside the budget.
The annual budget tells us how much government intends to collect and spend. A public balance sheet tells us whether the country is becoming wealthier or merely busier.
A strengthened fiscal responsibility system should therefore produce a consolidated statement of public assets and liabilities, supported by a fiscal risk report covering debt, guarantees, expenditure arrears, pension obligations, public private partnership commitments, government investments and the performance of significant public assets.
Nigeria has already made substantial progress. The tax system has been reformed. RMAFC has received stronger statutory powers. Revenue remittance is receiving closer attention. Subnational fiscal and debt management laws have spread across the federation.
The next task is to connect these reforms into one coherent architecture.
One federation does not mean one government. It does not require Abuja to prepare state budgets or determine every local expenditure. But one federation cannot indefinitely operate with several incompatible standards of fiscal disclosure and responsibility, especially when the risks eventually flow into the same banking system, the same public debt statistics and the same national economy.
Nigeria needs one minimum fiscal standard, one reliable picture of its public finances and institutions capable of acting before fiscal indiscipline becomes another national rescue operation.
The country has strengthened the revenue monitor. It must now give that monitor genuine independence, connect revenue assurance with fiscal responsibility, place it appropriately in the Federation Account distribution process and require it to demonstrate transparency in the duties it already performs.
That is how an old reform memorandum can find new life not by repeating yesterday’s recommendations, but by acknowledging the road already travelled and identifying, with greater clarity, the journey that remains.
Suleyman A. Ndanusa, PhD, OON, is an economist, lawyer, strategic studies scholar, and public policy thinker and practitioner with extensive experience in financial markets, regulation, governance, national Security and development.
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