The Nigerian Senate is considering a constitutional amendment that would increase the federal government’s share of federation revenue, arguing that current allocations are inadequate to meet mounting national security and infrastructure obligations.
The bill, sponsored by Senator Sunday Karimi (APC, Kogi West), scaled first reading at plenary on Tuesday and seeks to amend relevant constitutional provisions regulating revenue allocation among the three tiers of government.
According to Senator Karimi, the proposed alteration seeks to increase federal government revenue allocation to address mounting financial obligations and national responsibilities across Nigeria, as the current revenue sharing formula is outdated and unsustainable.
Speaking to journalists after the plenary session, Karimi explained that despite the federal government currently receiving the largest portion of federation revenue, it requires additional funds to meet its expanding responsibilities.
The lawmaker stated that the current revenue-sharing formula places excessive financial pressure on the federal government amid rising infrastructure decay and insecurity nationwide.
The senator cited the deteriorating condition of federal roads across Nigeria and the enormous cost of combating banditry, terrorism, and other security threats as major drains on federal resources under the existing revenue formula.
“Responsibilities borne by the federal government, particularly the construction and maintenance of federal roads across the country, have become overwhelming under the existing revenue formula, aside from the enormous responsibilities on internal security,” Karimi said.
He added that there is a need for adjustment in the revenue allocation coming to the federal government to ensure it can meet its constitutional responsibilities effectively.
Under Nigeria’s existing revenue allocation formula, the federal government receives 52.68 percent of revenues accruing to the Federation Account, while states collectively receive 26.72 percent and local governments get 20.60 percent.
The Federation Account is primarily funded by oil revenue, customs duties, Value Added Tax (VAT), and other federally collected revenues. Monthly distributions from the Federation Account Allocation Committee (FAAC) form the backbone of government finances at all three tiers.
The timing of the proposed amendment is particularly significant given that most Nigerian states depend heavily on FAAC allocations. Apart from Lagos State, Rivers State, the Federal Capital Territory and possibly two other states, over 90 percent of revenue for 32 states and the 774 local governments comes from their share of the Federation Account.
The internally generated revenue of many states and local governments, as reflected in their 2026 budget proposals, is less than 10 percent of their planned expenditure for the year.
The push for increased federal allocation comes as President Bola Tinubu’s administration faces significant financial pressures. The 2026 budget proposals include ₦5.41 trillion for defence and security, ₦3.56 trillion for infrastructure, ₦3.52 trillion for education, and ₦2.48 trillion for health.
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The federal government has also struggled with revenue shortfalls. During recent Senate hearings, officials revealed that while revenues for the 2024 budget were fully realized, the 2025 budget fell short of its N40 trillion target by N30 trillion.
The proposed constitutional amendment is likely to face resistance from state governors and local government chairmen, who may argue that reducing their shares would cripple their ability to deliver services and development projects to their constituents.
States have historically resisted attempts to alter the revenue sharing formula in favor of the federal government, arguing that they are closer to the people and better positioned to address local needs.
As a constitutional amendment, the bill will require a two-thirds majority vote in both chambers of the National Assembly and ratification by at least 24 of Nigeria’s 36 state Houses of Assembly before it can become law.
The Senate will refer the bill to its Committee on Constitution Review for detailed examination and public hearings before it returns to the chamber for second reading and subsequent consideration.
The proposed amendment represents a significant shift in Nigeria’s fiscal federalism and is expected to generate intense debate among federal, state, and local government stakeholders in the coming months.