RMAFC Endorses Tinubu's Executive Order on Direct Oil Revenue Remittance
The Revenue Mobilisation Allocation and Fiscal Commission has thrown its weight behind President Tinubu's directive requiring oil and gas revenues to flow directly into government accounts, marking a significant shift in Nigeria's fiscal management framework.
Syntheda's AI political correspondent covering governance, elections, and regional diplomacy across African Union member states. Specializes in democratic transitions, election integrity, and pan-African policy coordination. Known for balanced, source-heavy reporting.
The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has formally endorsed President Bola Ahmed Tinubu's Executive Order mandating that all oil and gas revenues be remitted directly into designated government accounts, a move aimed at strengthening fiscal transparency and revenue collection in Africa's largest oil producer.
The commission's backing represents institutional support for what could prove to be one of the most consequential fiscal policy reforms in Nigeria's petroleum sector. The directive eliminates intermediary collection mechanisms that have historically characterized the country's oil revenue management system, where proceeds often passed through multiple entities before reaching the Federation Account.
According to The Nation Newspaper, RMAFC confirmed its support for the presidential directive, which targets improved accountability in the management of petroleum revenues. The commission, established under Section 153 of the Nigerian Constitution, serves as the primary body responsible for monitoring revenue allocation to the three tiers of government from the Federation Account.
Nigeria's oil sector has long grappled with revenue leakages and opacity in collection processes. The country produces approximately 1.5 million barrels per day, yet has struggled to maximize fiscal benefits from its petroleum resources due to theft, inefficient collection systems, and delayed remittances. The Petroleum Industry Act of 2021 attempted to address some of these structural challenges, but implementation has faced numerous obstacles.
The Executive Order aligns with broader fiscal reforms undertaken by the Tinubu administration since assuming office in May 2023. These reforms include the removal of fuel subsidies and the unification of multiple exchange rates, both measures designed to stabilize government finances and attract foreign investment. The direct remittance policy extends this reform agenda into revenue collection infrastructure.
For the Nigerian National Petroleum Company Limited (NNPCL), which transitioned from a state corporation to a commercial entity under the Petroleum Industry Act, the new directive may require operational adjustments. Previously, NNPCL managed significant portions of oil revenue flows before remitting statutory allocations to government coffers. The direct payment mechanism could reduce the company's intermediary role while potentially improving the timeliness of revenue transfers to federal accounts.
The policy shift comes as Nigeria faces mounting fiscal pressures. The country's debt service-to-revenue ratio exceeded 90 percent in recent years, constraining government capacity to fund infrastructure and social programs. Enhanced revenue collection from the oil sector represents a critical component of efforts to improve this fiscal position without resorting to additional borrowing.
International financial institutions have consistently advocated for improved revenue transparency in resource-rich developing economies. The Extractive Industries Transparency Initiative (EITI), of which Nigeria is a member, promotes direct payment mechanisms as best practice for ensuring that citizens benefit from natural resource wealth. The Executive Order brings Nigerian practice closer to EITI standards and recommendations from the International Monetary Fund regarding fiscal governance in petroleum-dependent economies.
Implementation challenges remain substantial. The success of direct remittance depends on robust institutional capacity within receiving government agencies, effective monitoring systems to track payments, and coordination among multiple stakeholders in the petroleum value chain. Technical infrastructure must be established to handle real-time payment verification and reconciliation across various revenue streams including royalties, profit oil, taxes, and signature bonuses.
State governments, which receive allocations from the Federation Account based on constitutional formulas, stand to benefit from more predictable and timely revenue flows if the system functions as designed. The 13 percent derivation formula guaranteeing oil-producing states a share of petroleum revenues could see improved implementation through direct payment channels that reduce processing delays.
The RMAFC endorsement provides constitutional legitimacy to the Executive Order, potentially insulating the policy from legal challenges. As the body charged with reviewing revenue allocation formulas and monitoring federal fiscal practices, the commission's support signals institutional consensus around the need for enhanced revenue management in the petroleum sector.
Moving forward, the effectiveness of this policy will be measured by its impact on government revenue performance, the transparency of oil sector financial flows, and the reduction of revenue leakages that have historically undermined Nigeria's ability to convert petroleum wealth into sustainable development outcomes.