ISSUES IN NIGERIAN FISCAL FEDERALISM; THE RELATIONSHIP BETWEEN THE PRINCIPLE OF DERIVATION AND RESOURCE CONTROL

Abstract

In most federal countries of the world, intergovernmental relations have been contentious. Their revenue allocations have equally been reportedly contentious. The distribution of resources among the various levels of government has never been easy and smooth, hence the contention and Nigeria is no exception (Okeke, 2004). The determination of what constitutes the federal revenue and how it should be shared among the component federating units in Nigeria lie at the center of most, if not all national conflicts. This is why scholars and researchers of National Political Issues have upheld that Revenue allocation in Nigeria has generated a lot of controversy
in recent times. The issue had been the allocation between various tiers of government (verticalallocation) and between states (horizontal allocation) but recently, another dimension was introduced to the vertical allocation issues- revenue allocation pattern between the federal government and the Oil-rich states, local government and communities. This third dimension is what made “Issues in Nigerian Fiscal Federalism” unique because the criteria used so far have not enjoyed acceptability and therefore, it has been problematic. From the inception of the entity called Nigeria following the 1914 amalgamation, there has been schemes, schedules, modes, methods and patterns of relationship among the federating units in terms of administration (Intergovernmental relations) and finance (Intergovernmental fiscal relations), in which case, several principles have been expounded and adopted once in a while singularly or collectively such as the principle of Derivation, Need, Population, Even Development, Equality of State,National Interest, Independent Revenues, continuity of Government Services, Financial comparability, Fiscal Efficiency, Tax Efforts, Minimum National Standards, Equality of Access to development Opportunity, out of which the principle of Derivation has been variously advocated for and applied to equalize for the third dimensional sharing pattern referred to above but most recently, the derivation principle no longer seem to be favoured by these oil-rich states and they call for “resource control”. This call for resource control, like the principle of derivation has generated much heat in the Nigerian political scene of recent to the extent that a political solution was sought for where some Governors entered into agreement with the then president to ensure peace in Niger-delta region. The current president of the Federal Republic of Nigeria also created a Niger Delta Ministry to take care of the yearnings and aspiration of the people of
Niger-Delta. But the question this paper wishes to address is, has the situation abated? If not, why? And what is the solution? This paper therefore examines the key issues in the Nigerian fiscal federalism with emphasis on the relationship between the derivation principle and resource control, and how a prudent application of derivation principle will quell the issues inherent in Nigerian fiscal federalism generated by “resource control.