Revenue allocation in nigeria. What Is Revenue Allocation In Nigeria? 2022-11-17
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Revenue allocation is the process of distributing the income or revenue generated by a government among different levels of government (such as federal, state, and local) and different sectors or agencies within each level of government. In Nigeria, revenue allocation is a crucial aspect of the country's governance and has been a source of ongoing debates and controversies.
One of the main issues surrounding revenue allocation in Nigeria is the distribution of oil revenues, which constitute a significant portion of the country's income. Nigeria is one of the largest oil-producing countries in the world, and oil exports make up more than 90% of the country's total exports. However, the distribution of oil revenues has been a contentious issue, with some arguing that a larger share of the oil revenues should go to the states and local governments where the oil is produced, while others argue that a greater share should go to the federal government to fund national projects and programs.
Another issue related to revenue allocation in Nigeria is the distribution of non-oil revenues, such as taxes and duties. The country has a complex system of revenue sharing, with different agencies and departments responsible for collecting and distributing different types of non-oil revenues. This has led to inefficiencies and corruption, with some agencies and departments failing to properly account for the revenues they collect.
In recent years, there have been efforts to reform the revenue allocation system in Nigeria, with the aim of increasing transparency and accountability. One such effort is the implementation of the Integrated Payroll and Personnel Information System (IPPIS), which aims to improve the accuracy and efficiency of payroll and personnel management in the public sector. The IPPIS has faced some challenges, however, with some public sector employees alleging that it has led to salary shortfalls and other issues.
Overall, revenue allocation in Nigeria remains a complex and contentious issue, with ongoing debates about the best way to distribute the country's income among different levels of government and sectors. Reforms such as the IPPIS may help to improve the efficiency and transparency of the revenue allocation process, but more needs to be done to address the underlying issues and challenges.
Government Revenue Allocation In Nigeria & Sharing Formula
Ethnicity problems The problems with revenue allocation in Nigeria also border on ethnicity issues. These factors shall be explicitly explained below. Managing Fiscal Federalism: Revenue Allocation Issues. This culminated in the series of other post-independence commissions that were equally set up to provide the needed panacea on fiscal federalism arrangement for the country. An Essay on Fiscal Federalism. The minimum unit of responsibilities is believed to be the same in every state regardless of the size and capacity.
My take on Nigeria’s new revenue allocation formula
For example, in animal systems, the availability of food, water, and shelter can all be limiting factors for growth. Under the current revenue sharing formula, each month, the Federal Government takes the major share of 52. Of course, some state is generating revenue to the Federal Government coffers than the other and it is reasonable if they receive a substantial amount than the others. Thus, sharing the generated revenues builds a cordial relationship between the federal, state as well as local governments. According to Edevbie 2000 , the unity of our country has always been fragile. School enrollment refers to public funded schools only. The Political Economy of Fiscal Federalism and the Dilemma of Constructing a Developmental State in Nigeria.
In Nigeria, the three tiers of government are the Federal government, state government, and local government. Invariably, what is needed most is zero tolerance for corruption, prudent management of public resources and, ultimately, good governance. This principle promotes efficiency through this system of sharing revenue to units within the generation. Berkeley and Los Angeles: University of California Press. That is the recognition of more than one level of government in the country. Brief history about the principle of derivation in Nigeria The principle was first open to discussion in 1946 by the Phillipson commission who regarded it as a way of making regions with natural resources benefit from their God given endowment based on contribution to the central revenue pot Adebayo, 1988. The Supreme Court and Federalism in Nigeria.
Revenue Allocation in Nigeria: Definition and the Sharing Formula
The rest of the revenue allocation goes to the Eastern and Western states. However, the expected principle may lead to: 4. Free Essays The Consolidated Revenue Fund on the other hand is one of the accounts of the Federal Government which is exclusively managed by it. For Example, the current 13% derivation is a mean agreed value of a political negotiation in a constitutional conference held in 1995 between propositions by dominant 8% and opposing 18% parties Ikpatt and Ibanga, 2003. Comparative Federalism: Theory and Practice. This does not allow for proper allocations to be made to the local government.
Derivation Principle of Revenue Allocation in Nigeria
Please confirm you want to block this member. Fiscal Federalism: Towards Coping with and Resolving Future Challenges. Currently, it is set at 13%, which is still insignificant, unfair and unacceptable to the agitators of resource control Niger Delta. Correcting these anomalies is highly necessary. Over the years, the bulk of revenue allocation goes to northern states based on population, needs, level of development. Of course, some state is generating revenue to the Federal Government coffers than the other and it is reasonable if they receive a substantial amount than the others.
Breakdown Of Federal Allocations To States In Nigeria.
However, this has not been the case in Nigeria and one would wonder why. 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 allocation CyberEssays, 2010. The Horizontal Allocation Formula: The formula is applicable to States and Local Governments only. Current percentage derivation Fiscal federalism in Nigeria is a system that is practically shallow compared to the actuality of the system. However, this has not been the case in Nigeria and one would wonder why. Most Nigerians live in rural areas and these are the ones who do not have access to amenities.
The commission also reportedly received memoranda from the public sectors, individuals and private institutions across the country. For example, the Niger Delta region has continued to call for the remediation of its polluted environment whose damage came as a result of oil exploration; rather, the federal government has invested in what is not considered top priority. There is a need for an equity grant to the state generating bulk revenue for the nation. Yet, there is usually an issue when it comes to sharing and distributing revenue to the other tiers of government in line with the constitutionally assigned functions. However, it is the state and local governments that are nearer to these ones and can meet their needs more accurately.
The Constitution gave these States 13% derivation entitlement from the revenue generated in their region. The Dina Committee of 1968 was set up to address that problem at least on an interim basis. Comparing Federal Systems 2nd ed. Fiscal Federalism: A Comparative Introduction. Under special funds, he said, the report by the commission recommended 1. It connotes the degree of autonomy of state and local governments in carrying out various economic tasks.
Under the current sharing arrangement, the Federal Government takes 52. This could explain why violence and hostility seems to be a favourable option. It takes into account other factors of disparity such as population and level of development and then proposes that more revenue should be allocated to less developed states so as to bridge the gap in development. When the military took over power in 1966, it set up an interim committee Dina committee that again recommended the derivation principle due to its relevance. Some states have become overwhelmed by the abundance of ecological problems in their areas whereas some states do not bear such weight.