Revenue Allocation Formula in Nigeria

2406 Words Aug 2nd, 2010 10 Pages
REVENUE ALLOCATION FORMULA IN NIGERIA
INTRODUCTION
Prior to the discovery of oil in Nigeria, other sectors of the economy thrived. Agriculture, for instance, was a major source of revenue for the Western Region. The Eastern Region that was less endowed devised other sources of revenue. All this has however changed since the discovery of oil in the country. This has led to the demise of the other productive sectors of the economy. In fact, Nigerians are poorer today than they were in the pre-oil boom days. This is mainly because of the methodology of sharing the oil revenue. The struggle for the control of the oil wealth has led to an unfortunate shift from a revenue-oriented principle to an expenditure-oriented principle of revenue
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What this arrangement implies is that Nigerians could live and work in any part of the country. Therefore should the South-South region develop substantially, as a result of the 25-50% revenue allocation from oil, all Nigerians will benefit from it. By this I mean that Nigerians from any part of the federation could move to the region to work and to contribute to the growth of the area. After all, Nigerians from the south who were domiciled in the north and operated their businesses in the region have been part of the engine of development both in the pre- and post- civil war eras. In the same vein, too, northerners who might migrate to the South-South zone will also participate in the area's development.
In all, that bargaining and compromising are central tenets of a democratic dispensation should not be lost in the present political fury to promote individual, parochial and regional centrifugal interests at the expense of national cohesion.
The revenue and resources generated in the country are shared among three tiers of government: Federal, state and local government according to their constitutional responsibilities. The internal autonomy of 1946 coupled with the sharing of constitutional responsibilities raised the problem of revenue allocation in Nigeria. In an effort to find an acceptable formulae for sharing of revenue in Nigeria, as many as mine commissions were set up between 1946 and 1988. The revenue