THE POLITICS OF REVENUE ALLOCATION IN NIGERIA: NIGER DELTA EXPERIENCE
ABSTRACT
The Niger Delta region of Nigeria has in recent years been a hotbed of conflict. The region has been embroiled in turmoil over the struggle for equitable resource allocation. Federal systems by their nature are complex administrative designs because they involve multiple levels of government. The Nigerian federal system is thus beset by a lot of complex challenges. One of such challenges is the seemingly implacable and intractable Niger Delta crisis arising from lopsidedness in revenue allocation and sharing in the country. From 1960 till date the revenue allocation system can neither be said to be efficient or equitable. However, the nature and conditions of the financial relations in any federal system are crucial to the continued existence of such a system. The study explores Nigeria�s fiscal relations and the revenue allocation formula through a descriptive historical analysis. It specifically focuses on the imbalance and lopsidedness associated with the systems which have combined to affect the Nigerian federal system as a whole. The study finds that the lack of sustainable development in the Niger Delta region is traceable to imbalances in the revenue allocation formula in Nigeria which gives little to the goose that lays the golden eggs. Data for the study came from primary and secondary sources. The study concludes that for there to be efficient sustainable development and to reduce the tension in the Niger Delta, the Nigerian government should encourage the derivation principle in her revenue allocation formula. This in a way will promote peace and development in an otherwise volatile region of the country.
 
TABLE OF CONTENTS
Title Page    -    -    -    -    -    -    -    -    -    -
Certification-    -    -    -    -    -    -    -    -    -
Dedication    -    -    -    -    -    -    -    -    -    -

Acknowledgement -    -    -    -    -    -    -    -    -
Abstract    -    -    -    -    -    -    -    -    -    -

Table of Contents -    -    -    -    -    -    -    -    -


CHAPTER ONE -    -    -    -    -    -    -    -    -

1.0    INTRODUCTION    -    -    -    -    -    -    -    -
1.1    Background to the Study    -    -    -    -    -    -    -
1.2    Statement of Research Problem    -    -    -    -    -    -

1.3    Research Questions    -    -    -    -    -    -    -    -
1.4    Objectives of the Study-    -    -    -    -    -    -    -
1.5    Hypotheses    -    -    -    -    -    -    -    -    -

1.6    Significance of the Study    -    -    -    -    -    -    -

1.7    Scope and Limitations of the Study    -    -    -    -    -


CHAPTER TWO -    -    -    -    -    -    -    -    -
2.0    Theoretical Framework and Literature Review    -    -    -
2.1    Theoretical Framework    -    -    -    -    -    -    -

2.2    Literature Review    -    -    -    -    -    -    -    -
2.3    The Concept of Politics    -    -    -    -    -    -    -
 
2.4    The Concept of Revenue Allocation    -    -    -    -    -

2.5    The Relationship between Politics and Revenue Allocation -    -


CHAPTER THREE    -    -    -    -    -    -    -    -
3.0    Methodology    -    -    -    -    -    -    -    -    -
3.1    Research Design    -    -    -    -    -    -    -    -

3.2    Method of Data Collection -    -    -    -    -    -    -
3.3    Method of Data Analysis    -    -    -    -    -    -    -


CHAPTER FOUR    -    -    -    -    -    -    -    -
4.0    Presentation of Data and Data Analysis    -    -    -    -
4.1    Data Presentation    -    -    -    -    -    -    -    -

4.2    Data Analysis -    -    -    -    -    -    -    -    -

4.3    Findings of Data Analysis    -    -    -    -    -    -    -


CHAPTER FIVE -    -    -    -    -    -    -    -    -
5.0    Summary, Conclusion and Recommendations    -    -    -
5.1    Summary    -    -    -    -    -    -    -    -    -

5.2    Conclusion    -    -    -    -    -    -    -    -    -

5.3    Recommendations    -    -    -    -    -    -    -    -
References -    -    -    -    -    -    -    -    -    -

Appendix    -    -    -    -    -    -    -    -    -    -
 
CHAPTER ONE

1.0    INTRODUCTION

1.1    BACKGROUND TO THE STUDY

Social sciences seem to be filled with conflict situations that arise in almost every aspect of human life and endeavour. Since every aspect of human life is saddled with political and economic activities. In any federal system, the nature and conditions of the financial relations are crucial to the survival of the country. In fact, in most federal countries, the federating states always have some issues such as discourse, dispute and wrangling with the center.
The issue is centered on the problem of securing adequate financial resources to discharge essential political and constitutional responsibilities. Nigeria is not an exception. The decision as to what percentage of centrally generated revenue that would be retained among the tiers of government has always been a problem. These anomalies must be remedied in order to sustain a true federal system in Nigeria.
Revenue allocation is one aspect of governance where people have divergence, contentious and disagreement amongst themselves, and if not handle properly, could result to stalemate. Mishandling of revenue allocation by the federal government can cause chaos within regions. Revenue allocation in Nigeria
 a central theme in governance has a chequered historical antecedent. Many Commissions/Committees have been set-up at different times in the Nigerian national history and they were saddled with the responsibility of examining various fiscal issues and recommend the best principles and formulas in sharing national revenues to meet-up the challenges of the time.
Some     of    these    Commissions/Committees    include;    the    Phillipson Commission    (1946), the        Hicks-Phillipson Commission    (1951), the        Chicks Commission (1953), the Raisman Commission (1958), the Binns Commission (1964), the Dina Interim Committee (1968), the Aboyade Technical Committee (1977), the Okigbo Commission (1980), the Revenue Mobilization Allocation and Fiscal Commission (1989) and various military decrees (revisions) particularly 1970, 1971, 1992, etc. It is worthy of note that all the Commissions/Committees listed above were adhoc in nature except for the Revenue Mobilization Allocation and Fiscal Commission which was established as a legal and permanent entity to deal with fiscal matters on a more regular basis as the need arises.
Many instances of created formulae for revenue allocation have resulted in contents between federal and subordinate regional or state authorities. One question we should not shy away from asking is that, which level of government is closer to the people enough to deserve to earn more from the distribution of pool account? This question, indeed, has been avoided right from the inception of the
 distributable resources, and for these reasons, many people developed various ideas and methods as to what should be the criteria for equitable distribution formula. There are also relationship that are created in the politics of revenue allocation, that Famakinwa (2006:173), asked whether there is actually a certain amount material, that the control or allocation process secures the ordinary people of Niger Delta.
The politics of revenue allocation led to agitation of the Niger Delta people for resource control, which centered on competitive struggle amongst individual, groups and agencies to preside over the allocation process; citing a recent case, The Nigeria's National Conference that ended on August 14, 2014, the delegates
 marginalization of the Niger Delta region of Nigeria, where the bulk of the country�s wealth is produced through the exploration and exploitation of crude oil which is the colossus of Nigeria�s economic base. The people of this region have been agitating for fair share of the country�s wealth, the bulk of which comes from their region. This quasi model of federalism has not been able to address the socio- economic and developmental needs of these people in spite of their unquantifiable contribution towards the development of the entire nation.
 Because of the complex nature of the federal system in Nigeria, the federal government has been faced with difficult challenges of equitable distribution of revenue from the pool account, and as a result of this, the Niger Delta people feel marginalized and unemployment is on the increase for the Niger Delta region. From 1960 till date the revenue system can neither be said to be efficient or equitable. However, the nation and condition of the financial relations in any federal system are crucial to the continued existence of such a system. The Niger Delta being a minority group has been the affected people for the agitation of a better deal with the Nigeria Federation, with a high expectation that their contribution, I mean, meaningful contribution to the nation's growth will attract compensation that will foster growth and development in the region.
The issue of resource control has been one of the burning issues in Nigeria today. The Niger Delta region of Nigeria which is made up of minority ethnic
tribes accounts for a great percentage of the nation�s wealth. The region which is endowed with abundance of resources is greatly impoverished. The region has also been under great turmoil in recent times. There have been violent conflicts in the
region as a result of the struggle for the control of the vast oil wells existing in the area. (Okpeh 2004:21).
Much has been written on the subject of resource control in the Niger Delta region of Nigeria, but there has been a great confusion of the terms resource
 control and increase in revenue. Resource control goes beyond increase in revenue. It is the right of the real owners of the resources (indigenous communities) to control and play an active role in the exploration of resources in their communities. This involves active participation in the negotiation and sale of their resources. The indigenes of the Niger Delta region of Nigeria have continuously tried to make this distinction between increase in revenue and resource control. This is because without doing this, the struggle for resource control would be seen as one of those unreasonable demands by a group of disgruntled minority communities for
increase in their own �share of the national cake�(share of the nation�s wealth).
This would make nonsense of the whole struggle which goes beyond mere increase in revenue but focuses on deep-rooted problems in the Nigerian polity.
Such issues include ethnicity, marginalization of the minorities, equity in sharing of national revenue, fixing an adequate revenue allocation formula for the country, treatment of minority ethnic groups, developmental policies of the government, corruption, pollution, activities of multinational companies and their corporate social responsibility, growing militancy of the youths of the Niger Delta region, violence and breakdown of law and order in the Niger Delta region and the relevance of the continued unity of the Nigerian nation state. There is a litany of problems that would be addressed if the issue of resource control is properly addressed by the relevant authorities in Nigeria. The people of the Niger Delta do
 not want to be seen as �going cap in hand� to beg for more revenue. They resent the way they have been presented by the Nigerian government as greedy, poor and disgruntled militants and criminals in the world media. They see themselves as the
proverbial �goose that laid the golden egg�. However in their own case, this goose has been greatly ill-treated, vilified and made to face opprobrium. The people of Niger Delta have had their rights twisted, trampled upon and thrown into an abysmal abyss of abeyance and even oblivion.
The Nigerian government has not demonstrated a sincere and total commitment to address the resource control issue. This has been demonstrated in many ways. These include the continued refusal of the federal government to fix an adequate revenue sharing formula for the nation, the continued neglect of the Niger Delta region in terms of developmental policies and the campaign of calumny carried out in the local and international media against the people of the Niger Delta region by the federal government. The people of the Niger Delta region demand for their right to resource control. Mere increase in the revenue allocated to the people of the Niger Delta would seem more like a palliative measure. The indigenes of the Niger Delta region of Nigeria have been trying to make their voice heard. There has been serious activism in the region.
 
1.2    STATEMENT OF THE PROBLEM
There are problems with devising a scheme of revenue allocation that is nationally understood and widely accepted as equitable, over the years various formula have been tested and each has received some criticism and resentment from some quarters of the nation state. The Louis Chick commission adopted the derivative principle of revenue allocation. Under this principle, priority is given to the area under which the resources that generate wealth are exploited or derived from. It is stated that in the 1960s when crude oil was discovered in the Eastern and Midwestern region (areas that cover the Niger Delta region under the present geopolitical delineation), the revenue allocation formula was changed to 50%.
Dibua (2005:9) corroborates this fact in his article, Citizens and resource control in Nigeria: The case of minority communities in the Niger Delta. He states that the issue of the control of the wealth derived from natural resources and the manner of resource allocation has been contentious right from colonial period, particularly with the emergence of the federal system of government. The principle
of �derivation� was attached in the revenue allocation formula. �Derivation is seen as the primary vehicle through which the people from whose resources wealth is
generated would exercise control over a significant portion of their wealth�. This research seeks to address the issues faced by the Niger Delta region of Nigeria.
 
1.3    RESEARCH QUESTIONS
The aim of this research is to search for an understanding of the true meaning of revenue allocation. More specifically, the purpose of this research is to discuss the issue of revenue allocation and the possibility of fashioning out an acceptable revenue allocation formula for Nigeria.
Furthermore, this research aims at unraveling the puzzle behind the perennial crises in the Niger Delta region of Nigeria, why the distributed revenue allocation in the past has not been a blessing to the people of the Niger Delta, with a view to finding a lasting solution to the crises.
1.    How is the issue of resource control merely a struggle for increase in revenue or the control of the resources of the Niger Delta?
2.    How is the institutional measure on ground been able to solve the challenges that confronts the Niger Delta region?
3.    How has revenue allocation been the panacea to the perennial crises in the Niger Delta region?
4.    What are the ways on how revenue allocation can be distributed to the enhancement of the region?
 5.    What is the fiscal relationship between regions, the federal and states levels of government?
1.4    OBJECTIVES OF THE STUDY
The study objective is to examine the politics of revenue allocation in Nigeria vis-a-vis the experience and development of the Niger Delta with a view to proffering relevant suggestions that would promote and encourage a humane and just revenue allocation system to engender sustainable development in the areas. Sustainable development in this wise is not only about protecting the environment it is equally concerned with the best productive use of natural resources for the elimination of poverty and the improvement of welfare and quality of life.
1.    Establish the fiscal relationship between regions, the federal and other level of government.
2.    Identify the fiscal sources of the Niger Delta crisis.
3.    State the most profitable method that will be favorable to the Niger Delta.
4.    Proffer ways on how revenue allocation can be distributed to the enhancement of the region.
 5.    Proffer sustainable and equitable method for revenue allocation in the Niger Delta.
1.5    HYPOTHESES
The conceptual framework for fiscal decentralization as a link with persistence economic growth is encompassed in the belief that the increase in the level of fiscal decentralization will bring about economic development in Niger Delta region of Nigeria. The work will give some of the assuming proposition that there is indeed a connection between resource control and revenue formulae, and of course, the revenue allocation as pertain to the developmental needs and status of the Niger Delta and the looming crisis in the region. To guide the work appropriately, a number of hypotheses are going to be formed which includes;
1.    Revenue allocation issue contribute to political instability in Niger Delta region of Nigeria
2.    The revenue allocation formula adversely affect the economy of the Niger Delta
 1.6    SIGNIFICANCE OF THE STUDY
It is hope that the study will benefit Niger Delta region of Nigeria. This is because it will expose the challenges they face in revenue allocation. It would also be of great significance to researchers by way of making them aware of problems that have been uncovered by this research, so that they would know where to start from in their subsequent research work in the area of politics of revenue allocation in Nigeria.
It would also be useful to university students like students of University of Port Harcourt when doing a likely research. The study would be significant to policy makers and policy implementers, as they will make use of the findings and recommendations of this study.
This work shall establish that revenue allocation is not revenue utilization, but is in revenue utilization that the resolution of the crisis lies. This seeks to explain how the central allocating authorities shall, through careful monitoring and supervision ensures that the utilizing agencies and authorities are committed to prudent allocation of resources for the actual transformation of region. The emphasis here is that, there should be more dedication to empowering the people to produce for them, rather than merely offering finished goods as the solution.
 The search of solution should start with making tireless effort 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.
1.7    SCOPE AND LIMITATIONS OF THE STUDY
This study is relevant to all countries in the world, but the overall considerations, analysis and implications are within the framework of the Niger Delta region of Nigeria's economy and the method of distribution of revenue allocation. This work will concentrate heavily on the transformation effect of revenue allocation on the Niger Delta region of Nigeria, it will seek to address how much is noted and is utilized. It will also cover the budgetary implications of fiscal federalism.