The Search for a Symphony: A Discourse on the Issue of Derivation, Revenue Allocation, and Fiscal Federalism in Nigeria

Abstract

This paper joins the debate on the fiscal policy of the Nigerian government in terms of the revenue allocation formula of the federating units which has been a recurring theme in the country’s political existence. A review of revenue allocation formulas shows that the tools used as a measure to allocate and distribute revenue had been more of political gerrymandering, with each regime choosing which formula suits them without minding how the federating units react (Adedokun, 2002). An introspective analysis of the various Decrees enacted by the military regimes and the Acts between 1979 and 1983 shows that the southern part of the federation had been denied the right in maximizing the full potential of the resources in their territory. With all these, it portends that revenue allocation and distribution from 1968 to 1989 were not in line with true fiscal federalism as should be practiced. It is therefore recommended that the government and stakeholders at all levels should parley and do the needful by reviewing the current sharing formula with a view to correct the anomaly that has bedeviled revenue allocation and distribution over the years. Simply put, there should be decentralization in the generation, distribution, and allocation of revenue where states should manage their resources as it will reflect true fiscal federalism as practiced in civilized clime. The constitution remains silent on the cardinal issue of derivation and that is why today the question of who gets what, when, and how in terms of revenue allocation and sharing remains politicized and a recurrent issue in Nigeria till today.