Fiscal Federalism in Nigeria
CHAPTER1
INTRODUCTION:
The question of an acceptable formula for revenue sharing among the component tiers of the Nigerian nation is one of the most protracted and controversial debates in the political and macroeconomic management of the economy. This debate has its foundations in the history and evolution of the Nigerian federation.
“Revenue allocation or the statutory distribution of revenue from the Federation Account among the different levels of government has been one of the most contentious and controversial issues in the nation’s political life. So contentious has the matter been that none of the formulae evolved at various times by a commission or by decree under different regimes since 1964 has gained general acceptability among the component units of the country. Indeed, the issue, like a recurring decimal, has painfully remained the first problem that nearly every incoming regime has had to grapple with since independence. In the process, as many as thirteen different attempts have been made in devising an acceptable revenue allocation formula, each of which is more remembered for the controversies it generated than issues settled”
FISCAL FEDERALISM AND REVENUE ALLOCATION
FISCAL FEDERALISM Fiscal federalism refers to the scope and structure of the tiers of government responsibilities and functions as well as the allocation of resources among the tiers of government. Perhaps the most important issue of fiscal federalism is the revenue allocation formula, the sharing of national revenue among the various tiers of government (vertical revenue sharing) as well as the distribution of revenue among the state governments (that is, horizontal revenue allocation). The centralization of Nigeria’s fiscal federalism began with the report of the Dina Commission (1968) which argued that an appropriate revenue allocation system should result in a more equitable distribution of revenue among the states to achieve a balanced development of the
INTRODUCTION:
The question of an acceptable formula for revenue sharing among the component tiers of the Nigerian nation is one of the most protracted and controversial debates in the political and macroeconomic management of the economy. This debate has its foundations in the history and evolution of the Nigerian federation.
“Revenue allocation or the statutory distribution of revenue from the Federation Account among the different levels of government has been one of the most contentious and controversial issues in the nation’s political life. So contentious has the matter been that none of the formulae evolved at various times by a commission or by decree under different regimes since 1964 has gained general acceptability among the component units of the country. Indeed, the issue, like a recurring decimal, has painfully remained the first problem that nearly every incoming regime has had to grapple with since independence. In the process, as many as thirteen different attempts have been made in devising an acceptable revenue allocation formula, each of which is more remembered for the controversies it generated than issues settled”
FISCAL FEDERALISM AND REVENUE ALLOCATION
FISCAL FEDERALISM Fiscal federalism refers to the scope and structure of the tiers of government responsibilities and functions as well as the allocation of resources among the tiers of government. Perhaps the most important issue of fiscal federalism is the revenue allocation formula, the sharing of national revenue among the various tiers of government (vertical revenue sharing) as well as the distribution of revenue among the state governments (that is, horizontal revenue allocation). The centralization of Nigeria’s fiscal federalism began with the report of the Dina Commission (1968) which argued that an appropriate revenue allocation system should result in a more equitable distribution of revenue among the states to achieve a balanced development of the
References: Nyong, M. O. (1998) Fiscal Federation, Revenue Allocation Formula and Economic Development in Nigeria. Nigeria Financial Review, Vol. 7, No. 3, pp.33-54. Nyong, Michael (2003) “Fiscal Federalism, Revenue Allocation Formula and Economic Development in Nigeria”, in Ekpo, Akpan H. and Ubok-Udom, Enamidem (ed.) (2003) Issues in Fiscal Federalism and Revenue Allocation in Nigeria, Uyo: University of Uyo, pp.407-445. Obi, C. (1998) The Impact of Oil and Nigeria’s Revenue Allocation System: Problems and Prospects for National Reconstruction, in Amuwo, K., Agbaje, A., Suberu, R. and Herault, G. (eds) Federalism and Political Restructuring in Nigeria (Ibadan: Spectrum Books Limited). Olukoshi, Adebayo and Osita Agbu (1995) “The Deepening Crisis of Nigerian Federalism and the Future of the Nation-State”, in Liisa Laakso and A. Olukoshi (eds) Challenges to the Nation-State in Africa, Uppsala, the Nordic Africa Institute. Uche, Chibuike U. and Ogbonnaya Uche (2004) “Oil and the Politics of Revenue Allocation in Nigeria”. African Studies Centre, Lieden Netherlands, ASC Working Paper 54/2004.