Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development

Asadu Ikechukwu; Nwofia Johnson Emeka

doi:doi:10.11648/j.ipa.20180202.11

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Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development

Asadu Ikechukwu, Nwofia Johnson Emeka

Published in International and Public Affairs (Volume 2, Issue 2)

Received: 2 September 2017 Accepted: 23 September 2017 Published: 2 June 2018

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Abstract

Imbalances in Nigeria’s federal arrangement have been a constant source of conflict in Nigeria’s politics. Fundamentally, the federal structure was adopted to accommodate Nigeria’s multi-ethnic nationalities. The dissatisfaction among the federating units underlies an unending search for an acceptable revenue sharing formula contention. The problem identified is that the current formula gives more revenue to the Federal government rather than to the State and Local Governments that have greater base and responsibilities for the provision of social welfare to the people. The arrangement stifles the sub national governments’ ability to provide social welfare and accomplish other statutory responsibilities, aggravates crises of relative deprivation, accentuates corruption and intensifies ethnic politics. Being ex-post facto, the paper uses qualitative expository analysis to examine the nature and character of Nigeria’s fiscal relations and the implications for socio-economic development. The finding is that Nigeria, being a consumptive mono economy, is overly susceptible to external shocks. The country therefore, needs to allocate more revenue to the sub-national governments in order to encourage an integrative, bottom-up, people-oriented development. It recommends that the vertical revenue allocation formula be restructured in the following proportions: federal 35%; state 40%; local government 25%. Moreover, derivation principle should be given primacy in horizontal allocation formula to encourage competition among the tiers of government. The economy should be diversified to reduce over-dependence on federal allocation while the fight against corruption should be sustained.

Published in	International and Public Affairs (Volume 2, Issue 2)
DOI	10.11648/j.ipa.20180202.11
Page(s)	39-47
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Federal, Federalism, Fiscal, Fiscal Federalism, Fiscal Relations and Revenue Allocation

References

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[5]	Suberu, R. T. and Agbaje, A. (1998). The future of Nigeria’s federation. In Amuno, K. Agbaja, A. and Herault, G. (eds.) Federalism and Political Restructuring in Nigeria. Ibadan: Spectrum Book Limited.
[6]	Okoli, F. C. (2014). Federalism and intergovernmental relations: The structure of the administrative state. In Oguonu, C.N. (ed.) Management and Development: A Contemporary Reading in Public Administration. Abuja: Premium Publishing House.
[7]	Eminue, O (2003) Revenue allocation among federal, state and local government (1990-1998). In Ekpo, E. Akpan C. and Ubok-Udom, E. (ed) Issues in Fiscal Federalism and Revenue Allocation in Nigeria. Ibadan: University of Uyo.
[8]	Lukpata, V. I. (2003). Revenue Allocation Formula in Nigeria: A continuous search. International Journal of Public Administration and Management Research, 2 (1) 68 – 73.
[9]	Anorey, N. (2006). Types of federalism. Berlin: Max Planck Encyclopedia of Comparative Constitutional Law.
[10]	Ikeji, C. (2011). Politics of revenue allocation in Nigeria: A reconsideration of some contending issues. Journal of Policy and Strategic Studies 1(1) 32–48.
[11]	Janda, K., Berry, J.M. & Goldmam, J. (2008). The challenge of Democracy, Government in America. Boston New York: Houghton Miffing Company.
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[13]	Hueglin, T. O. & Fenna, A. (2015). Comparative federalism: A systematic inquiry (2nd ed). Toronto: University of Toronto Press.
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[16]	Adebayo, A. G (1993). Embattled Federalism: History of Revenue Allocation in Nigeria, 1946-1990. New York, Peter Lang.
[17]	Bashir, K. A. (2008). “The Mechanics of Revenue Allocation: Understanding the need for Effective Data Collection and management”, workshop paper.
[18]	Fadahunsi, A. (1998). The Nigerian nationalities and fiscal federalism. A paper presented at a seminar on devolution of power in a federal state held on 20/04/2016 organized by Friendrich Ebert Foundation, University of Lagos.
[19]	Joseph, R. J., Taylor, S. D. & Agbaje, A. (1996). Nigeria. In Kesselman, M., Krieger, J. & Joseph, W.A. (Eds). Comparative Politics at the Crossroads. Toronto: D.C. Heath.
[20]	Olowononi, G. D. (1998). Revenue Allocation and Economics of Federalism. In Amuno, K. Agbaje, A. and Herault, G. (eds.) Federalism and Political Restructuring in Nigeria. Ibadan: Spectrum Book Limited.
[21]	The vanguard (2016), Effects of recession on Nigeria’s economy, 23 April.
[22]	Ikeanyibe, O. M. (2014). An overview of monetary and fiscal policies in the first decade of the 21st century in Nigeria. In Oguonu, C. N. (ed.) Management and Development: A Contemporary Reading in Public Administration. Abuja: Premium Publishing House.
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APA Style

Asadu Ikechukwu, Nwofia Johnson Emeka. (2018). Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development. International and Public Affairs, 2(2), 39-47. https://doi.org/10.11648/j.ipa.20180202.11

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ACS Style

Asadu Ikechukwu; Nwofia Johnson Emeka. Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development. Int. Public Aff. 2018, 2(2), 39-47. doi: 10.11648/j.ipa.20180202.11

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AMA Style

Asadu Ikechukwu, Nwofia Johnson Emeka. Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development. Int Public Aff. 2018;2(2):39-47. doi: 10.11648/j.ipa.20180202.11

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@article{10.11648/j.ipa.20180202.11,
  author = {Asadu Ikechukwu and Nwofia Johnson Emeka},
  title = {Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development},
  journal = {International and Public Affairs},
  volume = {2},
  number = {2},
  pages = {39-47},
  doi = {10.11648/j.ipa.20180202.11},
  url = {https://doi.org/10.11648/j.ipa.20180202.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ipa.20180202.11},
  abstract = {Imbalances in Nigeria’s federal arrangement have been a constant source of conflict in Nigeria’s politics. Fundamentally, the federal structure was adopted to accommodate Nigeria’s multi-ethnic nationalities. The dissatisfaction among the federating units underlies an unending search for an acceptable revenue sharing formula contention. The problem identified is that the current formula gives more revenue to the Federal government rather than to the State and Local Governments that have greater base and responsibilities for the provision of social welfare to the people. The arrangement stifles the sub national governments’ ability to provide social welfare and accomplish other statutory responsibilities, aggravates crises of relative deprivation, accentuates corruption and intensifies ethnic politics. Being ex-post facto, the paper uses qualitative expository analysis to examine the nature and character of Nigeria’s fiscal relations and the implications for socio-economic development. The finding is that Nigeria, being a consumptive mono economy, is overly susceptible to external shocks. The country therefore, needs to allocate more revenue to the sub-national governments in order to encourage an integrative, bottom-up, people-oriented development. It recommends that the vertical revenue allocation formula be restructured in the following proportions: federal 35%; state 40%; local government 25%. Moreover, derivation principle should be given primacy in horizontal allocation formula to encourage competition among the tiers of government. The economy should be diversified to reduce over-dependence on federal allocation while the fight against corruption should be sustained.},
 year = {2018}
}

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TY  - JOUR
T1  - Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development
AU  - Asadu Ikechukwu
AU  - Nwofia Johnson Emeka
Y1  - 2018/06/02
PY  - 2018
N1  - https://doi.org/10.11648/j.ipa.20180202.11
DO  - 10.11648/j.ipa.20180202.11
T2  - International and Public Affairs
JF  - International and Public Affairs
JO  - International and Public Affairs
SP  - 39
EP  - 47
PB  - Science Publishing Group
SN  - 2640-4192
UR  - https://doi.org/10.11648/j.ipa.20180202.11
AB  - Imbalances in Nigeria’s federal arrangement have been a constant source of conflict in Nigeria’s politics. Fundamentally, the federal structure was adopted to accommodate Nigeria’s multi-ethnic nationalities. The dissatisfaction among the federating units underlies an unending search for an acceptable revenue sharing formula contention. The problem identified is that the current formula gives more revenue to the Federal government rather than to the State and Local Governments that have greater base and responsibilities for the provision of social welfare to the people. The arrangement stifles the sub national governments’ ability to provide social welfare and accomplish other statutory responsibilities, aggravates crises of relative deprivation, accentuates corruption and intensifies ethnic politics. Being ex-post facto, the paper uses qualitative expository analysis to examine the nature and character of Nigeria’s fiscal relations and the implications for socio-economic development. The finding is that Nigeria, being a consumptive mono economy, is overly susceptible to external shocks. The country therefore, needs to allocate more revenue to the sub-national governments in order to encourage an integrative, bottom-up, people-oriented development. It recommends that the vertical revenue allocation formula be restructured in the following proportions: federal 35%; state 40%; local government 25%. Moreover, derivation principle should be given primacy in horizontal allocation formula to encourage competition among the tiers of government. The economy should be diversified to reduce over-dependence on federal allocation while the fight against corruption should be sustained.
VL  - 2
IS  - 2
ER  -

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Author Information

Asadu Ikechukwu

Department of Public Administration and Local Government, Faculty of Social Sciences, University of Nigeria, Nsukka, Nigeria
Nwofia Johnson Emeka

Social Sciences Unit, School of General Studies, University of Nigeria, Nsukka, Nigeria

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APA Style

Asadu Ikechukwu, Nwofia Johnson Emeka. (2018). Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development. International and Public Affairs, 2(2), 39-47. https://doi.org/10.11648/j.ipa.20180202.11

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ACS Style

Asadu Ikechukwu; Nwofia Johnson Emeka. Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development. Int. Public Aff. 2018, 2(2), 39-47. doi: 10.11648/j.ipa.20180202.11

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AMA Style

Asadu Ikechukwu, Nwofia Johnson Emeka. Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development. Int Public Aff. 2018;2(2):39-47. doi: 10.11648/j.ipa.20180202.11

Copy | Download

@article{10.11648/j.ipa.20180202.11,
  author = {Asadu Ikechukwu and Nwofia Johnson Emeka},
  title = {Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development},
  journal = {International and Public Affairs},
  volume = {2},
  number = {2},
  pages = {39-47},
  doi = {10.11648/j.ipa.20180202.11},
  url = {https://doi.org/10.11648/j.ipa.20180202.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ipa.20180202.11},
  abstract = {Imbalances in Nigeria’s federal arrangement have been a constant source of conflict in Nigeria’s politics. Fundamentally, the federal structure was adopted to accommodate Nigeria’s multi-ethnic nationalities. The dissatisfaction among the federating units underlies an unending search for an acceptable revenue sharing formula contention. The problem identified is that the current formula gives more revenue to the Federal government rather than to the State and Local Governments that have greater base and responsibilities for the provision of social welfare to the people. The arrangement stifles the sub national governments’ ability to provide social welfare and accomplish other statutory responsibilities, aggravates crises of relative deprivation, accentuates corruption and intensifies ethnic politics. Being ex-post facto, the paper uses qualitative expository analysis to examine the nature and character of Nigeria’s fiscal relations and the implications for socio-economic development. The finding is that Nigeria, being a consumptive mono economy, is overly susceptible to external shocks. The country therefore, needs to allocate more revenue to the sub-national governments in order to encourage an integrative, bottom-up, people-oriented development. It recommends that the vertical revenue allocation formula be restructured in the following proportions: federal 35%; state 40%; local government 25%. Moreover, derivation principle should be given primacy in horizontal allocation formula to encourage competition among the tiers of government. The economy should be diversified to reduce over-dependence on federal allocation while the fight against corruption should be sustained.},
 year = {2018}
}

Copy | Download

TY  - JOUR
T1  - Fiscal Federalism and Imbalance in Revenue Allocation in Nigeria: Implications for Socio-economic Development
AU  - Asadu Ikechukwu
AU  - Nwofia Johnson Emeka
Y1  - 2018/06/02
PY  - 2018
N1  - https://doi.org/10.11648/j.ipa.20180202.11
DO  - 10.11648/j.ipa.20180202.11
T2  - International and Public Affairs
JF  - International and Public Affairs
JO  - International and Public Affairs
SP  - 39
EP  - 47
PB  - Science Publishing Group
SN  - 2640-4192
UR  - https://doi.org/10.11648/j.ipa.20180202.11
AB  - Imbalances in Nigeria’s federal arrangement have been a constant source of conflict in Nigeria’s politics. Fundamentally, the federal structure was adopted to accommodate Nigeria’s multi-ethnic nationalities. The dissatisfaction among the federating units underlies an unending search for an acceptable revenue sharing formula contention. The problem identified is that the current formula gives more revenue to the Federal government rather than to the State and Local Governments that have greater base and responsibilities for the provision of social welfare to the people. The arrangement stifles the sub national governments’ ability to provide social welfare and accomplish other statutory responsibilities, aggravates crises of relative deprivation, accentuates corruption and intensifies ethnic politics. Being ex-post facto, the paper uses qualitative expository analysis to examine the nature and character of Nigeria’s fiscal relations and the implications for socio-economic development. The finding is that Nigeria, being a consumptive mono economy, is overly susceptible to external shocks. The country therefore, needs to allocate more revenue to the sub-national governments in order to encourage an integrative, bottom-up, people-oriented development. It recommends that the vertical revenue allocation formula be restructured in the following proportions: federal 35%; state 40%; local government 25%. Moreover, derivation principle should be given primacy in horizontal allocation formula to encourage competition among the tiers of government. The economy should be diversified to reduce over-dependence on federal allocation while the fight against corruption should be sustained.
VL  - 2
IS  - 2
ER  -

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