Abstract
The task of nation building is a daunting one and requires the sharing of statutory responsibilities and allocation of revenue to the components political units to financed development projects. This is designed to promote good governance and even development. The delineation of powers into exclusive, concurrent and residual powers for the federal, state and local government and the allocation of funds to each tier of government underscores propriety of political interdependence to nation building. Section 165 of the Constitution of the Federal Republic of Nigeria 1999 and the Allocation of Revenue (Federation Account, etc.) Act No.1 1982 stipulates that the revenues generated by the federal government should be credited into the Federation Account and disburse monthly among the three tiers of government as defined in the Revenue Act 1982. All the tiers of government depend on revenue from the federation account to finance development projects. In spite of this, many state government are unable to finance their capital and recurrent expenditure hence the justification to review the existing revenue sharing formular in favour of them. The fiscal challenge raises question the viability of many states and the need to allocate more resources power to the lower tier governments to enhance their fiscal capability and operation efficiency.
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