Revenue Allocation Formula: Appraisal of fundamental issues in Nigeria’s fiscal federalism and political stability

Abstract

Nigerian federalism structure has always been bordering on managing diversity and revenue distribution among its constituent components. It asserts that strong opposition typically accompanies revenue sharing or distribution, leading to an ongoing crisis. This study indicates that the improper method or criteria utilized in income allocation has always been the root of dispute. The study, therefore, focuses on how revenue allocation appears to influence Nigerian political stability. However, the outcome has come to define the social, political, and economic ties between the various classes, organizations, and ideologies within the federation. It proves that financial subordination deviates from proper federalism functioning in accordance with theories of federalism. Thus, to interrogate the discourse critically, the study adopts the Relative Deprivation Theory while relying on secondary data to gather the needed information. The study concludes that, to reduce the political tension on the revenue allocation, the constitution should give the centre and the states the authority to manage their resources. It recommends that, governance should be enthroned with transparency, accountability, and probity. Aside from that, the system needs to be restructured to weaken the centre and make it politically undesirable. This will lower political tensions and the marginalization of particular geopolitical zones, while also ensuring polity equity and fairness and reducing political violence.