CHALLENGES OF ECONOMIC DEVELOPMENT IN NIGERIA: EMPHASIZING INTER-GOVERNMENTAL FISCAL RELATIONS
Authors: Ibrahim Yusuf Abubakar
Published: June 2024
Abstract
<p>Nigeria's multi-level government structure and endless needs of each structure have created a complex and contentious fiscal relationship among the federating units. There is a constant agitation for a higher percentage of the distributable pool (national revenue) by each unit. This agitation is particularly strong for the derivative criteria, which gives more weight to states and local government areas where the most lucrative revenue-yielding resources, particularly oil, are obtained. The current revenue allocation formula in Nigeria is based on a number of factors, including population, equality of states, landmass, terrain, and internal revenue generation (IGR). However, the derivative criteria, which was once a major factor in the formula, has been relegated to the background in recent years. This has led to calls for reform of the revenue allocation formula, with some states and local government areas demanding a higher percentage of revenue based on their natural resource endowments. The debate over the revenue allocation formula is complex and often divisive. It is important to balance the need for equity among the federating units with the need to ensure that all units have the resources they need to carry out their constitutional responsibilities.</p>
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