To guide the work appropriately, a number of hypotheses are going to be formed which includes;
The work will target at examining the revenue allocation with a view of fully appreciating its impact on political stability of the nation. It will also review briefly some past revenue allocation principles in order to place this work on the proper historic perspective. The work will go a long way in contributing through analytical review of revenue allocation formula and the impact it has on the political stability of the economy. The success recorded in achieving the objectives of investigating the revenue allocation and political stability in Nigeria economy, point at the importance of the fact aspect of political economic management function of the government, which have appeared to be neglected by Nigerians.The topic will elicit this strong point, that all economic development is anchored on efficient development and management if its resources including its revenue. An efficient development and allocation of revenue to the feature of production through the government will definitely proper the nation’s economy to greater productivity, thereby enhancing economic development as political stability in the economy. Indeed the Nigeria political economy sustained a fragile stability and confronts and undermines political future. A future dominated by a society and resolution of rising expectations. A fundamental problem of political system is to control and to direct the process of change. However, political strategy will offer view economic opportunities and varied cultural experience intellectual stimulation through sufficiently adaptable, complex, autonomous and coherent to absorb order and the participation of groups to promote social and economic changes in the society. Development, the essential quality of modest lies in the character and direction of change. This changes invariably not merely the will but the capacity to absorb change such that it does not undermine stability as to present the development of the institutional capacity, fulfill transformation. Finally, I will enjoin the government to note all the recommendations. I will make because it is going to be a direct outcome of the study. The implementation of the most pertinent recommendation will contributes towards a more stable political society in our developing economy.
CHAPTER ONE: Introduction
CHAPTER TWO: Literature Review
2.1 The Definition of Revenue Allocation
2.2 The Definition of Political Stability
2.3 The Various Methods of Revenue Allocation
2.4 The Various Methods have help in Bringing about Political Stability or Otherwise in the Past
2.5 Criteria in use for Revenue Allocation
2.6 A Review of Federal Revenue Share 1992 – 1995
2.7 A Review of State Revenue Share 1992 –1995
2.8 A Review of Local Government Revenue Share 1992 –1995
2.9 Emergent Issues in Revenue Allocation 1999 Constitution and Newly Proposed Revenue Allocation (2001)
CHAPTER THREE: Research Methodology
3.1 Research Design
3.2 Interview
3.3 Source of Data
3.4 Primary Data Sources
3.5 Secondary Data Sources
3.6 Statistical Method Used
CHAPTER FOUR: Data Presentation and Review of Pre-independence Revenue Sharing Allocation Formula
4.1 1946 Revenue Allocation Formula
4.2 1957 – 1958 Revenue Allocation Formula
4.3 1963 – 1964 Revenue Allocation Formula
4.4 Review of 1989 – Revenue Sharing Formula
4.5 Review of 1995 Revenue Sharing Formula
4.6 Hypothesis Testing
CHAPTER FIVE: Introduction
5.1 Summary of Findings
5.2 Recommendations
5.3 Conclusion
5.4 Area of Further Research
Bibliography
INTRODUCTION
1.1 BRIEF HISTORY OF THE NIGERIAN EXPERIENCE AS A NATION STATE
To highlight some significant event and developments in response to a review of Nigeria experience as a nation state, it is intellectual to present a brief survey of the part to understand the distinct phases through which the nation passed to arrive at its present political state and economic condition vis-à-vis revenue allocation. Some of these historical periods have enjoyed such a degree of political stability that in reference to revenue allocation and political stability, not only were great or studies made in the promotion of social and economic development, the overall smoothness in the functioning of the governmental system at both the regional and federal levels over shadowed the negative consequences of the power struggles and by the late 1950’s a myth of Nigeria as a “stable democracy” enjoyed considerable international credibility.
The introduction of modern methods of governance on a gradual pace in what could be described as a semi- federal and quasi-democratic structure of 1946 Nigeria, like a newborn baby of the British colonial administration passed through various developmental phases of political growth. By 1957, the political structure has developed into a well-structured democratic federal political process upon the background and modern political process was set Nigeria; in 1979, the constitution of the federal republic of Nigeria provided for a democratic federal structure in the political process.
In this study, it is observed that the introduction of system of revenue allocation in the Nigeria political economy dates bank to the political development of 1946. It is note worthy to state that the revenue allocation system in the political process had indeed been accompanied by constitutional changes over the decades. These suggest that the constitution provides the essential political environment in a nation state.
It is significant that while the constitution emphasis national unity with its concomitant principles of deviation, population and equity of state in revenue allocation, to some observer such constructional provision were not borne out of a true desire for national unity and integration.
The revenue allocation issue in the political economy of Nigeria is a volatile as any other national question such a population. This means that how national revenue is shared among the different component political units of the federal structure is irretrievably tied to the national question. Hence no broadly acceptable national revenue allocation formula has been had since 1947 and which has not generated controversy but had to be made acceptable “in the interest of national unity”.
Since 1947, about thirteen (13) formulas have been devised for the sharing of national revenue. Everybody has formed none satisfactory and such each one has generated more controversy than the last one.
The politicians through their activities in the revenue allocation agitation and ensuring power struggle aroused the suspicion of the source but visibly political military to hostility in a military fashion and cash in one invitation to seize power in the country public opinion on national consciousness believed that the national interest has debased by the politicization of the revenue system sharing. Its outcome becomes the breakdown of the common national spirit action and consciousness.
Thus, the Nigeria economic development through nationalism was scarified on the alter of ethnic and states power politics.
1.2 THE VARIOUS SOURCES OF REVENUE IN THE NIGERIA STATE
Revenue generation efforts by government have been from various sources. However, there could be classified into 2 main sources of revenue in Nigeria. There are the oil and non-oil sources. Over the year, prior to 1973, the revenue from non-oil source contributed to sixty percent of the federally collected revenues but from 1973 to now the contribution from the non-oil sources have reduced drastically. This invariably makes may for the oil sources to generate a major share of the government revenue.
Foreign exchange earnings from export of agricultural commodities such as cocoa, palm produce, rubber, groundnut e.t.c. as major sources of foreign exchange earnings and government revenue.
The federal constitution of Nigeria, provides that all revenue collected under federal laws be known as federally collected revenue and paid into federation account and distributed to the federal, state and local government according to the existing revenue allocation formula.
The revenue of government comprises of the following sources;
SOURCE: OIL REVENUE
Others:
1.3 THE NEED/BASIS FOR REVENUE ALLOCATION
In the light of presentation and deliberation between the various levels of government, federal state and local government and the need to ensure that each tier of government in the federation has adequate revenue to enable it discharge its function as laid down in the constitution. Therefore in determining what proportion of the national revenue often referred to as federation account that should go to my tier of government for the discharge of the constructional functions, it will be ideal to first demarcate these functions, as may be laid down in me constitution for each tier of government, identify also the appropriate level of service to be performed by each tier determine what should be the cost to perform efficiently at that level and therefore add up the financial requirements for each tier should then yield the relative weight in financial terms of the function laid down by the constitution. With these fact on hand, the three tiers of government in proportion to these relative weights. It follows that for effective distribution of national revenue; basic broad guidelines or the distribution of the revenue among the three tiers of government becomes necessary and must be strictly adhered to.
1.4 STATEMENT OF THE RESEARCHERS
There are problems with devising a scheme of revenue allocation that is nationally understood and widely accepted as equitable, over the years various formula as many as thirteen have been tested and each has received some criticism and resentment from some quarters of the nation state.
1.5 PURPOSE OF STUDY
The work aims at examining the revenue allocation with a view to fully appreciating its impact on political stability of the nation.
This work also reviews briefly some past revenue allocation principles in order to place this work on the proper historical perspectives.
1.6 STATEMENT OF HYPOTHESIS
Base on the problem and objective of this study the following hypothesis is proposed.
1.7 SIGNIFICANCE OF THE STUDY
Having clearly identified the problem of sharing the revenue accruing to the nation state of Nigeria. The search of solution should start with making tireless efforts to educate the people to understand the principle and to be reasonably flexible in formulating the underlying formula for the distribution of revenue among the differed level of government, the three tiers of government in an acceptable manner in order to promote national unity through common hitherto.
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