Revenue Allocation

Topics: Economic growth, Capital accumulation, Capital Pages: 16 (5417 words) Published: February 8, 2012
Journal of Economics and Sustainable Development ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.2, No.3

Revenue Allocation Formula and Its Impact On Economic Growth Process In Nigeria Usman Owolabi Akeem Faculty of Management Science, PMB4000,Ladoke Akintola University, Ogbomoso, Nigeria Tel: +234 836675099

Abstract This study attempts to analyze the impact of allocation formula on the Nigeria growth process. The analysis reveals the extent to which revenue allocation formula adopted in the past has affected the path of economic growth and development in Nigeria. The data is purely secondary data and was sourced from the world bank publication, CBN, Journal and other published and unpublished materials. There is need, therefore to address the problem by formulating a move efficient revenue allocation wastage and mismanagement of founds. Also effort should be geared towards articulation of policies that will enhance capital formulation, employment of the abundant and measures may include attachment of more weight to the share of local government from the federal collected revenue, placing more emphasis on the internal revenue generation, redefinition of the concept of definition and sustaining the present effort of government as regards budget monitoring and implementation. Keywords: Revenue, Allocation, Economic Growth, Nigeria 1. Introduction Nigeria as a nation operates a federal structure of government federalism refers the existence in one country of more than one level of government, each with different expenditure responsibilities and taxing powers. This shows that fiscal federalism, a consequence of federalism, is all about the relationship among the different units of functions and tax powers to the constituent units. The existence of imbalance between functions and resource base makes it expedient for the higher level of government to transfer revenue to the lower level. This is referred to as ‘efficiency transfer or balancing’ The sharing of funds from the federation account is one of the contentious and sensitive issues in the Nigeria polity this has remained a central element of interfiscal relations. In Nigeria revenue allocation is taken as the distribution of national revenue among the various tiers of government in the federation in such away as to reflect the structure of fiscal federalism. This issue is so important that in some other countries it has become a national question (mbanefoh 1993, emenuqua, 1993). For instance kayoed (1993) observed that a satisfacto ry solution to the question and its solution” This shows that in any nation the stability as a political entity depends to a large extent on revenue location. A democratically elected government can be sustained if only there is an appropriate distribution of nation revenue among state governments themselves. 1.1 Statement of The Problem The return of democratic government is expected to lead to the practice of a more balanced system of fiscal federalism, more transparency, fiscal accountability and more devolution of power to lower units of government and hence more fiscal decentralization. While a greater degree of decentralization would, no doubt, contribute to greater


Journal of Economics and Sustainable Development ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.2, No.3

grassroots participation, generate more local development, increase efficiency and equity, create employment opportunity and promote poverty alleviation, it must not be done in such a way as to conflict with the national objective or unduly complicate it. The change in the Internal geographic structure of the nation as a result of strong and continuous agitation for state creation has led to distortion in the revenue allocation formula and this has weakened the fabrics of federalism. For example, 12 states were created out of four regions in 1967. in 1976, the number of state rose to 19 while...
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