Revenue allocation formula in nigeria. (PDF) Revenue Allocation Formulae in Nigeria: A Continuous Search 2022-11-01
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What Is Revenue Allocation In Nigeria?
In Nigeria parlance, revenue allocation could be defined as the practice whereby the federal government shares and distribute some part of the generated revenue to States and the local governments. The big challenge now is politics. Revenue allocation refers to the practice whereby one level of government turns over a portion of the revenue it generates from taxation and other sources to another government level which is usually a lower level of government. 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. Federalism in Nigeria refers to the devolution of self-governance by the West African nation of Nigeria to its federated states, who share sovereignty with the Federal Government. This soon broke down because the West favoured the derivation principle, the North the principle of need, while the East preferred the national interest principle.
Derivation Principle of Revenue Allocation in Nigeria
ALLOCATING REVENUE IN NIGERIA Every government in the world chases after the economic development of its domain by trying to achieve macroeconomic objectives in a particular government system. Rather, it is a politically imposed type of compromise between ethnocentric parties. 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. Federation Accounts Allocation Committee FAAC was set up by the Allocation of Revenue Federation Account , Act, Cap. Examples include responsibilities like the police, public transport, etc. The committee also created a special Grants Account for mineral producing states and areas struck by natural disasters and emergencies. That is the recognition of more than one level of government in the country.
Hence, these states believe they are being cheated when the Northern states have more of what they seemingly work for. The commission also reportedly received memoranda from the public sectors, individuals and private institutions across the country. The committee argued that the rent from the onshore oil exploration be fully given to the state from which the extraction was made, while 10% of the royalties be shared on derivation Ekpo, 2004. Oil is a major source of energy in Nigeria and the world in general. Inland Revenue Service Director of Research, National Universities Commission Treasurer,.
(PDF) Revenue Allocation Formulae in Nigeria: A Continuous Search
This formula was still maintained immediately after the creation of a twelve-state federation in 1967, the allocation to a region simply being shared out among the states carved out of it. It was to be distributed among the Federal, State and Local governments in the ration 60:30:10. The Murtala government rejected the formula in use under Gowon and introduced a new one. TOPIC: THE NIGER DELTA STRUGGLES: ITS IMPLICATIONS FOR RESOURCE CONTROL. In fact, Nigerians are poorer today than they were in the pre-oil boom days. This is entrenched in S.
Over the years, the bulk of revenue allocation goes to northern states based on population, needs, level of development. Perhaps in due course this too shall be made known. The latter belongs to the entire Federation while the Federal Government, albeit keeps it in trust on behalf of the three tiers of government. The major problem with the current system is the lack of technical base or any form of mathematical calculation. Lack of Autonomy The local government depends largely on the states and federal government allocation for it to function.
Later, the Senate rejected the formula recommended by the House of Representatives and recommended its own, which became very controversial. In the previous chapters, I have been able to highlight on some of the advantages. The main reason for this is the undue attention given to political considerations. J Cookey, submitted its report to theBabangida government in 1987. Thus, this article takes a critical look at the politics of revenue allocation in Nigeria and argues that it has remained a continuous exercise since Nigerian post independence governance and politics. Although, there is an increase compared to the immediate past 1% derivation.
My take on Nigeria’s new revenue allocation formula
People have different ideas on what an ideal formula for revenue allocation should look like. At the National Assembly, the House of Representatives amended it further. It involves certain principles based on some factors to be applied in revenue allocation. Federation Accounts Allocation Committee FAAC Federation Accounts Allocation Committee FAAC was set up by the Allocation of Revenue Federation Account , Act, Cap. Meanwhile, customs duties were distributed according to contribution to the central pool. It is noteworthy that even the financial autonomy granted to the state judiciary and House of Assembly since 2018 has not been implemented or executed partially by a few states which decided to give it a thought.
Government Revenue Allocation In Nigeria & Sharing Formula
Lack of statistics This is another problem on account of which revenue allocations in Nigeria continues to suffer. The rest of the revenue allocation goes to the Eastern and Western states. Click here for details. Back to the report, is there a possibility of the new revenue sharing formula getting implemented in the life of this administration? The revenue and resources generated in the country are shared among three tiers of Revenue Allocation System in Nigeria Pre- Independence. Reduction of Hostility Despite the fact that the oil producing Niger Delta region has long been agitating for resource control, a fair percentage derivation will reduce the agitation turned hostility especially on oil installations in the region and any other region in the future.
. The census should provide reliable statistical details for problem-free revenue allocation in the coming years. Declared revenue was raised and kept by the regions. In arriving at the new vertical revenue allocation formula, Mbam said there was wide consultation with major stakeholders, public hearing in all the geo-political zones, administering of questionnaires and studying of some other federations with similar fiscal arrangements like Nigeria to draw useful lessons from their experiences. Proper Development The present percentage derivation has failed to reflect the needs of the local people and its governance. Hence, the National interest has to be put into consideration while sharing revenue. The disbursement of revenue to the three tiers of government in Nigeria has been a subject of hot debate because of the political nature of the exercise.
Which state has the highest revenue allocation in Nigeria?
Revenue allocation is defined as the division of available resources within an organisation or company. So, population figures also shapes election result, since a more population place will justifiably Oil and Gas Law. The state government also controls the affairs of the local government. Advantages and Challenges 4. This change could likely increase the chances of accountability as government will be closer to the people, who in turn will stop at nothing to ensure their resources are rightfully channelled for equitable and meaningful development. School enrollment refers to public funded schools only. MINIMUM NATIONAL STANDARD While sharing revenue between the tiers of government, the National standards in some major sectors like Education, Health, Agriculture, and a host of others must be considered.