Revenue allocation

6 June 2017

Revenue means income. Allocation means to divide. Revenue allocation is defined as the division of available resources within an organisation or company. At a broader level, it is the process of assigning a cost to the amount of services and products generated. Government revenue is obtained from taxes, licenses and fees and allocated to public facilities. Because of the current revenue allocation formula In Nigeria, though there is a great deal of wealth In the country from the oil Industry, 64% of the population lives below the poverty line.

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While the federal government akes over half of all the money In the Nigerian federal account, little has been done to promote welfare and development projects that would benefit the general public. According to the Nigerian Revenue Moblllzatlon Allocation and Fiscal Commission, a new revenue allocation formula Is In the works, but It remains to be seen If these measures are enough to remedy the problem.

When Nigeria’s maverick CBN Governor recently In an Interview Justified the sadlstlc, sub-human and horrific terrorist activities going on In the North of Nigeria by attributing It to the fact that 011 evenue was being unfairly shared on the basis of derivation primarily instead of population which is the North’s competitive advantage, I was shocked that such a flawed argument could come from such a respected Nigerian whose controversial reform of the Nigerian banking sector has won him praises and awards locally and internationally.

SLS traced the root cause of terrorism in the North to grinding poverty in the North which he claims was caused by Nigeria’s use of the derivation principle instead of population as the primary yardstick for allocating revenue among he states. He believes that this preference for the derivation principle has short- changed the North and disadvantaged it. I totally disagree with SLS and will articulate in this article my reasons for disagreeing with him and my suggestions on the way forward for Nigeria using history as a guide to arrive at what I believe is a Just solution that will be favourable to all.

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