FISCAL FEDERALISM AND THE POLITICS OF REVENUE ALLOCATION IN NIGERIA

Abstract

The politics of determining the sharing of the federal revenue among the federating units in Nigeria has always been contentious. This study therefore investigated the practice of fiscal federalism and the politics of revenue allocation in Nigeria. It adopted the secondary method of data collection and relied on documentary analysis to arrive at some conclusions. The study was located and guided by the theory of federalism. It was obvious in the study that, revenue allocation formula is not a mere instrument for determining what segment of the polity gets what percentage of the so-called national cake, rather it is more of a tool used for ensuring fiscal efficiency, social justice and political stability, which guarantees growth and sustainable development within the context of well-defined national objectives. The study submitted that, in Nigeria, however, the federal government, over the years, has centralized resources and appropriated most powers at the detriment of the federating units. There has therefore, been unrelenting agitations for devolution of powers and resources to the federating units. These activities, including the agitation for resource control, review of the sharing formula and the politics of derivation have often times been confrontational, violent and have polarized the country along the age long ethno-regional lines. Among other recommendations, the study established the need to devolve powers and resources through constitutional frameworks, diversify the economy, ensure justice, equity and accountability in the quest for cohesion, stability and continued existence of Nigeria.