Revenue Allocation in Nigeria has its history and dynamics dating back to 1946.
Revenue allocation in Nigeria has been one of the major issues in the country's political and economic development, beginning with the Phillipson Commission of 1946. This is partly because different regions and states have different natural resources, populations, economic activities and revenue-generating capacities.
The revenue allocation problems in Nigeria date back to the colonial period. The country was then divided into regions with different levels of economic development and different abilities to raise revenue.
As regional governments gained more responsibilities, disagreements arose over how revenue collected by the central government should be shared among the regions. These disagreements shaped revenue allocation in Nigeria.
Several commissions were set up to settle these money disagreements and to work out fair rules for sharing revenue. They included the Phillipson Commission of 1946, Hicks-Phillipson Commission of 1951, Chick Commission of 1953 and Raisman Commission of 1958.
After independence in 1960, the issue of revenue allocation in Nigeria continued. The country changed from regions to states, and the number of governments sharing national revenue grew.
The discovery and growing importance of petroleum also made revenue allocation more controversial. Oil revenue became a major source of government income. Oil-producing areas demanded greater recognition through the derivation principle.
Subsequent commissions and committees, such as the Binns Commission, Dina Committee, Aboyade Technical Committee and Okigbo Committee, were established to review the allocation system.
Despite these efforts, disagreements have continued over derivation, population, equality, resource control, dependence on federal revenue and the right sharing formula. These disagreements keep revenue allocation in Nigeria a major economic and political issue.
Revenue Allocation Commissions and Panels in Nigeria
Several commissions and committees have examined revenue allocation in Nigeria.
Important examples include:
1. Phillipson Commission (1946)
The Phillipson Commission of 1946 was one of the earliest commissions set up to look at the money relationship between the central government and the regions in Nigeria. At the time, Nigeria was under British colonial rule. The regional governments had different money responsibilities and different ability to raise revenue.
The commission examined how revenue should be shared between the central government and the regions and how the regions could finance their responsibilities. Its recommendations helped to establish an early framework for intergovernmental financial relations in Nigeria.
The commission was important because it saw the need for a system that would let the different regions receive funds. The regions needed these funds to carry out their assigned functions.
2. Hicks-Phillipson Commission (1951)
The Hicks-Phillipson Commission of 1951 was established to review the financial arrangements between the central government and the regional governments. Its work became necessary because Nigeria's political and constitutional arrangements were changing, giving the regions greater responsibilities.
The commission examined how revenue should be distributed and how the regions could obtain adequate funds to perform their functions. It also considered the financial relationship between the central and regional governments. Its recommendations contributed to the development of the revenue allocation system during the period leading towards self-government.
3. Chick Commission (1953)
The Chick Commission of 1953 was set up to examine the financial relationship between the central government and the regions. One of the issues it considered was how government revenue should be allocated so that each region could meet its responsibilities.
The commission's work was important because regional governments were becoming increasingly responsible for areas such as education, health, and other public services. It therefore considered principles that could guide the distribution of revenue among the different governments. Its recommendations formed part of the continuing development of Nigeria's intergovernmental financial system.
4. Raisman Commission (1958)
The Raisman Commission of 1958 was set up in the period just before Nigeria gained independence. It reviewed the existing revenue allocation arrangements between the Federal Government and the regions and recommended changes to the system. One of the key principles linked to the commission was derivation. Under this principle, regions were entitled to benefit from revenue generated from certain resources within their territories.
The commission also considered the need to provide adequate revenue to the different regions while maintaining national unity. Its recommendations influenced the revenue allocation arrangements that Nigeria inherited at independence in 1960.
5. Binns Commission (1964)
The Binns Commission of 1964 reviewed the revenue allocation arrangements after Nigeria became independent. By this time, the regional governments had greater responsibilities, and there were disagreements over how federally collected revenue should be distributed.
The commission examined the financial relationship between the Federal Government and the regions and considered appropriate principles for sharing revenue. It sought to balance the need for regional financial independence with the need for national development. Its work contributed to the continuing adjustment of Nigeria's revenue allocation system in the early post-independence period.
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6. Dina Committee (1968)
The Dina Committee of 1968 was established during the military period to examine revenue allocation and related financial matters. At the time, Nigeria was facing serious political and economic problems, including the effects of the civil war and changes in the country's administrative structure.
The committee examined how revenue could be distributed more fairly among the different parts of the country. It also considered the financial needs of the regions and the growing importance of national revenue sources. Its recommendations contributed to the debate about how Nigeria's revenue should be shared among the different levels of government.
7. Aboyade Technical Committee (1977)
The Aboyade Technical Committee of 1977 was established to examine Nigeria's revenue allocation system in greater detail. It was chaired by Professor Pius Okigbo? Correction: the committee was headed by Professor Ojetunji Aboyade.
The committee proposed a more systematic approach to revenue allocation and considered the responsibilities and financial needs of the different levels of government. It recommended the use of several criteria in distributing revenue rather than depending on only one principle.
Its work was important because Nigeria's revenue structure had changed considerably, particularly because petroleum had become an increasingly important source of government revenue.
8. Okigbo Committee (1979)
The Okigbo Committee of 1979 was set up to review the recommendations and issues around revenue allocation. It also reviewed the money responsibilities of the different levels of government. It looked at the sources of revenue open to the Federal, State and Local Governments and considered how these revenues should be shared.
The committee also considered the financial responsibilities of each level of government. Its recommendations influenced the revenue allocation arrangements associated with the transition to the Second Republic. The committee's work reflected the continuing attempt to create a fair system of distributing national revenue.
9. Revenue Mobilization Allocation and Fiscal Commission (RMAFC)
The Revenue Mobilization Allocation and Fiscal Commission (RMAFC) is a constitutional body established under Nigeria's 1999 Constitution. It has an significant responsibility in relation to revenue mobilisation, allocation and fiscal matters in Nigeria.
The commission monitors revenue accruing to the Federation and reviews the revenue allocation formula from time to time. It also advises the Federal Government on matters relating to revenue sharing among the Federal, State and Local Governments. RMAFC therefore has an important part in the present system of revenue allocation in Nigeria. It also helps to settle disagreements over how federally collected revenue is shared.
Summary of Revenue Allocation in Nigeria
Revenue allocation has been a major issue in Nigeria since the colonial period.
Different regions historically had different levels of revenue-generating capacity.
The discovery and increasing importance of petroleum revenue made revenue allocation more complex.
The creation of additional states and local governments increased the number of units sharing revenue.
Resource-producing areas have often demanded greater benefits from resources produced in their territories.
Non-resource-producing states have generally emphasised the need for equitable national distribution.
Different governments have therefore established commissions and committees to review revenue-sharing arrangements.
Phillipson Commission (1946), examined financial relations between the central and regional governments.
Hicks-Phillipson Commission (1951), examined financial arrangements between the central and regional governments.
Chick Commission (1953), considered revenue allocation and financial relationships.
Raisman Commission (1958), reviewed revenue allocation before independence and gave importance to derivation.
Binns Commission (1964), reviewed revenue allocation after independence.
Dina Committee (1968), examined revenue allocation and related financial matters.
Aboyade Technical Committee (1977), reviewed the revenue allocation system.
Okigbo Committee (1979), examined revenue allocation and financial responsibilities.
Revenue Mobilization Allocation and Fiscal Commission (RMAFC), has constitutional responsibilities relating to revenue allocation and the review of allocation formulas.
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