Revenue Allocation and the Challenge of Federalism in Nigeria

This paper is focused on the federal government revue allocation and the challenges of allocations   The method of data analysis adopted  is the qualitative descriptive method of investigation.  The qualitative research method deals with variables that are not easily manipulated to empirical measurement or verification. The poor structural layout of the Nigerian federalism is rooted in our colonial history, our colonial history affects the structure of the federal system we are operating the paper made the following recommendation amongst others, the Nigeria state should be restructured to reflect fiscal federalism in its character and composition.


INTRODUCTION
Revenue allocation under a federal system of government creates complex problems.The complexity stems from the distinctive nature of federalism as a form of government, in which the governmental powers are shared between the canker and the coordinate units.The history of Nigeria federal structure dates back to the period of amalgamation in 1914, whereby the British was propelled by the need to subsidize cost of administration than by the desire for national unity.The revenue then was derived largely from palm oil, and it was used for financing the administration of the country with little emphasis on derivation as principles to be used for sharing revenue.The federalism of Nigeria, began as a unitary colonial state in 1996 but disaggregated into three regions in 1954 and into four regions in 1963.In 1967, the regions were abrogated and 12 states created in their place.The number of states increased to 19 in 1976, to 21 in 1987, and ultimately to 36 in 1996, with a federal capital territory which has almost acquired the status of a state.In addition, the number of local governments which have functioned as a third tier of government, has grown from 299 in 1970 to 774 in 1996.
The question of an acceptable formular for revenue sharing among the component tiers of government, is one of the most protracted and controversial debates in the political and macroeconomic management of Nigerian economy.This debate has its foundation in the history and evolution of the Nigerian federation.Revenue allocation has been one of the most contentious and controversial issues in the nation's political life.So contentious have the matter been that none of the formulae evolved at various times by a commission or by decree under different regimes since 1964, has gained general acceptability among the component units of the country.Indeed the issue, like a recurring decimal has painfully remained the first problem that nearly every incoming regime has had to deal with since Independence.The issue of revenue allocation and the sharing formula, have generated such intense debate that led to the demand of a national conference.
It was during this period that the resources control phenomena rose to an unprecedented dimension such that the struggle for political power becomes the fight for resource control.The politics of revenue sharing was brought to limelight when oil became the main source of national revenue and boast Nigeria Economy.Between 1968 till date, income from petroleum constituted over 80 percent of federal revenue.The importance of the federal revenue therefore increased proportionately (Ebinefa, 2012:15).As a consequence of this major shift in revenue generation, a desperate struggle to win control of state power ensured since this control meant for all practical purposes being all powerful and controlling everything.

Statement of Problem
The problem is that in recent years doubts have been expressed about capacity of the present federal arrangement in the country to facilitate process of nation building.It is argued that the present nature and structure of Nigerian states has not in any way influenced federalism since it does not guarantee a just and equitable share of national power and resources for all ethnic groups in 659 the country.Thus is said that the conditions for a common Nigeria identity do not exist.

LITERATURE REVIEW
Revenue allocation among various units of government in Nigeria is replete with agitation, controversies and outright rejections due to the nature of politics in vogue.Since independence, Nigeria's revenue allocation system was neither efficient not equitable, indeed ethnicity, religion, tribalism and region had contribution to it and in the face of such complexities therefore several revenue allocation principle had to be adopted faulted and discarded, the point being stressed here is that several revenue allocation commission had been set up to look at the issue such as: 1.  9. Constitutional Provision of 1995 and1999.This dialectics of revenue generation and denial constitutes the source of deepening crisis of Nigeria federalism.The current crisis in the Niger Delta is one definite consequence of "feelings of neglect which have been suppressed for quick a long time.This is obvious from the quantum of protest actions from NGOs and community based social action groups.In summary terms, both the report of the Belgore commission (1999), and the environmental impact assessment studies on the Niger Delta contain sufficient empirical evidence of the massive degradation, rapid deforestation and displacement of people from their traditional sources of income in framing and fishing as of land acquisition, gar-flaring and frequent oil pollution.

Research Question
From the foregoing, the study poses the following research questions to help guide the focus of this research.They include: 1.Over the character of the Nigerian state engender crisis of revenue allocation in Nigeria.2. What is the cause of Niger Delta struggle for resource control?
Nigeria accounts for about 25 billion barrels out of Africa's 66 billion barrels of proven reserve with a large chunck of the country's oil resources located in the Delta region (Jehen, 2005).Economically, oil produced in the Niger Delta accounts for about, 80 percent of Nigerians Gross Domestic Product (GDP) and 90 percent of national budget (Ogbogbo 2005).
The discovery and exploitation of the abundant mineral and natural resources in the Niger Delta began with the advent of Europeans in many parts of African including Nigeria in the 15th century.Indeed, from 1472 (when the first set of Europeans landed in the Delta region) of the Berlin conference of 1884-1885(Ahmed 2006) in (Adeoki and Imuoh, 2015), the Delta region like other parts of Nigeria was the centre of competition by the various European companies and individuals for the exploitation of the region's mineral and natural resources.Significantly too, this period also marked the integration of the economy of the Delta region into the capitalist endowed which further ensured the continued exploitation of the mineral and natural resources of the region by European powers (Adeoki and Imuoh 2015).
The unsavouring kale in the development of human and material resources of the Delta region continued with the emergence of colonialism in the 1900's and establishment of oil River protectorate in the 1980's.The Amalgamation of 1906, and 1914 completed the process of British colonization of Nigeria (including Niger Delta Area) to that of metropolitan Britain.During the over 100 years of colonial rule, the mineral and natural resources of the over 308 independence kingdoms, empires or vassalage were pillaged and appropriated for the benefit of the metropolitan power (Ahmed, 2006) in (Adeoki and Imuoh, 2015).The Bulk of these resources explained by the British came from the Delta region.
The Nature of Revenue Allocation in Nigeria Ojo (2010) posited that the history of revenue allocation formula and commission all in an attempt to arrive/at an acceptable sharing formula for Nigeria occurred long before independence.The first set of commission ever set up by the colonial masters was in 1946 named Philipson which recommended three principles for revenue sharing -derivation, population, and even progress.Various commissions with their recommendations were equally experience in the Nigeria fiscal federation but none has intimately addressed the problem of revenue sharing.The derivation principle he argued has been a reoccurring phenomenon in the principles advocated by their commissions to ensure amenable and equitable revenue sharing formula.Nevertheless, the principle of derivation in revenue allocation has been consciously and systematically obliterated by successive regimes, resulting in the drastic reduction of the derivation principle from 100% in 1953 to 50% in 1982 to 3% in 1992 and currently 13%.

Revenue Allocation And Niger Delta Struggle For Resource Control
In Nigeria revenue allocation largely implies 3 allocation of oil revenue.Therefore, oil is central to the politics of inter-governmental fiscal relations (Orokpo & Makoji, 2014).The due further stated that Nigeria's fiscal federalism and relations hinges on the fundamental question of who gets whole of the national cake (oil revenue),when and how deducing from the above, it is obvious that revenue allocation in Nigeria economy is a matter of policies of oil revenue sharing.Therefore, it is natural for every region to politics through conventional processes, to have reasonable at enough share of the oil booky including Niger Delta on whose soil on territory the oil is located.In this kind of scenario, the onus lies with the central government to device a means to ensure that every region a means to ensure that every region gains equitable or fair share of the national revenue.This is to minimize contention, conflict and the feeling of marginalization or deprivation inherent in a heterogeneous federal system like that of Nigeria.
In view of the above reality, politics as the authoritative allocation of value according to David Easton becomes germane.The value in this context is the oil revenue and how the central government exercised its authority at right to allocate the oil revenue to all the states or regions in the country is a matter of concern to all the constituent units.The agitation of the Niger Deltans which metamorphosed to armed struggle is premised on their perception of being shortchanged or marginalized in favour of other regions by the federal government in terms of oil revenue allocation and infrastructural development.They accused the federal government of being ethnic biased, jettisoning the derivation principle to the detriment of the Delta region, out-right and forceful domination of the region as a minority group etc.
The implication and reality of the struggle of the Niger Delta for resource control is as a result of the failure of leadership on the side of the federal government.The result is the loss of faith by the masses of Niger Delta and the consequence violence agitation from various ethic segments of the region for resources control, self reliance or determination and general insecurity.According to Umar (2013:2) when we look at the Niger Delta militants they were chaps that were unemployed and they watched helplessly how their oil resources were being cornered by irresponsible greedy, reckless and immodest eliker, they resorted to self help through militancy, oil theft and so on.

Research Hypothes
1.The character of the Nigerian state has significantly engendered the crisis of revenue allocation.2. Unfavourable revenue allocation and regional marginalization are the causes of Niger Delta struggle for resource control.

METHODOLOGY
The method by which data were generated for this study is secondary sources.Being a documentary research, it relied on written and published materials on the subject of study.The sources of data for this research include; textbook, journals, newspapers, magazines, internet sources, articles, official publications of federal government and its revenue agencies etc.

Method of Data Collection
This study is based on the qualitative research method.It relied on documentary and historical facts, basically secondary sources of data which include textbooks, journal, newspapers, magazines and internet sources etc.The rational behind our choice of secondary sources of data is anchored on the basic fact and the inadequacy of personal interview or by direct observation.Hence the qualitative method is considered the most appropriate for the nature of study before us and this is because of the complex nature of the variable under study, therefore with help of available factor we can now extract valuable information in order to make or draw inference from the available evidence.In the words of sun ( 2009), the qualitative technique seek to describe translate and come to terms with the meaning not the frequency of events.

Method of Data Analysis
The method of data analysis adopted is the qualitative descriptive method of investigation.The qualitative research method deals with variables that are not easily manipulated to empirical measurement or verification.This presupposes a cause effect relationship between behaviour and outcome.The study seeks to understand the relationship between the independence variable of the research (x) and how it affects the dependent variable (9).
The qualitative method of data analysis is a search for general statements about relationships among data categories, this method of data analysis is essentially the application of qualitative research technique through the organization and interpretation of research data.In otherwords it is the process in which we move from the raw data that have been collected at part of the research study and use it to provide explanations, understanding and interpretation of phenomena, people and situations which we are studying (Colombo, 2012).
The aim of analyzing qualitative data is to examine the essence and symbolic content of that which is found within the study.Descriptive explanation is given to the data generalized on our research, in other to create the relationship between the variables under study.
Hence its process of bringing order structure, enables the use of this method and meaning to the data gathered in the research work by giving a qualitative description of the variable under study.

The Character of Revenue Allocation in Nigeria
The Nigerian fiscal system had been subjected to a series of reviews and changes.None of these had ensured mutually acceptable system of allocation in which the conflicting interests of the federal and state governments have been harmoniously reconciled.Another important element to note is that all based on expediency but not on any study of the perennial problem which plague the country.It has remained an emotive, sensitive and highly politicized issue.The regional factions of the priviledged classes have continued to maneuver and scheme for greater advantages in the division of the nations revenue.Only in this manner can they improve their benefits from society, (Ikeji, 2011:203).
Past revenue allocation exercises have been partial in two respects.First, they have rarely taken account of the totally of the financial resources available to each state of the federation.Within a plan period would show that the advantage enjoyed by oil producing states such as Ondo, Akwa Ibom, Rivers, Bayelsa and Delta appears exaggerated.Past revenue allocation exercises have also been peril because of the exclusion of sources of revenue with high growth potential.For instance, excluded from revenue allocation are excise duties which because of rapid and extensive growth of manufacturing industries have immense potential as a source of revenue.
The phenomenon of revenue allocation is quite importance in federal finance.In Nigeria, the allocation of revenue between the federal government and the component parts and among the units themselves is fraught with a number of complicated problems which range from economic to political.Since the attainment of federal status, a number of commissions were appointed to study the systems of revenue allocation and make recommendations to the governments on how the national revenue can be fairly and equitably allocated among there levels of government, yet none has been able to arrive at a generally acceptable system and formula.(Ikagi 2011:307).The problem is rooted in the nature of peculiar federalism in Nigeria.It is either the centre is two weak as was the during the military administrations and thereafter.The political implication of the former was that the regions were too strong that they were able to influence the allocation formula in favour of the principle of derivation which made the former western Nigeria very rich.In the case of the later, that is, military administrations, the centre was too strong that it exercise power of monopoly and could manipulate the formular of influence the commission on revenue allocation in its favour.But in a true or developed federalism, the issue of revenue allocation is done through political bargaining and agreement between the inclusive and component government with a view to making funds available to each level of government to effectively exercise its constitutional responsibilities.In Nigeria however, the reverse is the case since the federal government collects virtually all the juicy revenues and allocates some in a way and manner it deems fit.The result is that some states are given more than the others depending on theft relative political influence which leads to uneven development among, the states and in consequence breed mutual hatred and acrimony amongst stakeholders.(Ikeji 2011:307).
The lack of foresight and objectivity on the part of the economic planners is a problem in the system of revenue allocation.The part fiscal blue prints and schemes have always lacked valid economic base, with the percentage of revenue allocation in each state is proportioned to the share of taxes derived from each Okeke by the federal government.(Ebieya 2012:244).
In Nigeria, because of the emergency of petroleum, this principle in effect dictates that the states from where the huge oil tax revenue are derived are entitled to a disproportionately large share.Apart from the criterion for revenue allocation has diskinex disadvantages such as the creation of disparities in financial resources available to the states.Development planners in Nigeria hardly carryout what they state on papers or sometimes are left uncompleted if ever they take off.This resources in the disproportion between the population growth and economic growth rate.(Esienfa 2012:244).
The federal government do not provide enabling environment for the enthronement of credible revenue allocation formula.This is evident in the role successive government played in this regard.Whenever the government appoints a commission in revenue allocation, it also sets guidelines for such a commission to guide its conduct and recommendations often any derivation is regarded as an act of sacrilege.A typical example was the rejection by government of the Dina commission's report in 1969.The major constrainer associated with Nigerian federal finance and revenue sharing is that its operation is incompatible with the objective of standard public finance practice.According to Adedji (1996:12) federal finance in Nigeria has developed and operated virtually in complete disregard of the main objectives of public fiannce, allocation efficiency and equity in the sharing of revenue, particularly among the regions, such principles of federal finance as need, equity, stability and national interest have placed on the derivation principles as the basis of revenue allocation.This together with the lack of in built process of adjustment in the fiscal system has hampered the development of national unity and inhabited the growth of an affective development oriented national and fiscal policy (Adedeji 1996:12).

Revenue Allocation Under IBB Regime (1985 -1989)
The morniest issue under Babngida regime was the fiscal scheme.The issue of revenue allocation was so thorny that Babangida regime had to review the revenue allocation four times during its duration.From the inception of the Babangida regime in 1985 all through 1989, the formula of revenue allocation stood at: Table 1.Revenue Allocation Federal -55% State -32.5% Local -10% Allocation is the oil mineral producing states, and general ecological problems stood at 1.5% and 1% respectively.(Lukpaka, 2013:35).

Revenue Allocation Under Abacha Regime (1994 -1998)
Abacha regime adopted and maintained the formula bequeathed to it by the Babangida regime.This formula is presented below:

Revenue Allocation Under President Olusegun Obasanjo (1999 -2007)
The proposed formula by revenue mobilization, allocation and fiscal commission gives: Apparently, not satisfied him where is considered an upside formula, the southern Governors insist that only equal revenue sharing between the federal government and the states in Nigeria will be considered that and realistic by the southern states.They therefore required for the adoption of the following, formula for revenue allocation in Nigeria:

Revenue Allocation (2000 -2010)
The current vertical allocation formula which is based on presidential executive order is as follows: For purpose of emphasis, the social development factor comprised of education (4.0), Health (3.0) and water (3.0) (Ba shit 2008:7).From the foregoing, revenue allocation in Nigeria be it pre-independence of post-independence era is characterized with conbrouct by Each level of government -federal, state and local wants to have a sizeable share of the national cake.The frequent promulgation of military decrees before now and the frequent setting up of commissions both for the purpose of revenue allocation was to satisfy the increase of the stake-holders in having a fair share of allocation from the common pool account.It is in a bid to satisfy these competing interests that Nigeria is in a continuo's search for a generally acceptable formula for revenue allocation.Therefore, all efforts aimed at achieving generally acceptable formulae for revenue sharing in Nigeria should be guided by national interest which should super case individual or premodial interests.

Dynamics of Niger Delta Structure for Resource Control
The above assortion is premised on the argument that before the 1966 military incursion in the administration of Nigeria, Nigeria operated a federal structure which based its revenue allocation formula on the principle of derivation.At that time Nigerian main source of revenue is from primary products (groundnut, cocoa and palm oil) produced from the three dominant ethnic group in Nigeria (Hausa/Fulani (North), Yoruba (West) and Igbo (East).During this era of derivation principle, each region is entitled to 50% of the revenue that is generated from the resources within its environment while the remaining 50% goes to the central government.
According to Anugwom ( 2001) the Niger Delta region at the onset also enjoyed 50% derivation from oil resource, but that was when oil contributed only 8% to the national revenue.But as crude oil gained currency in the international market to the extent that it contributed up to 80 -90% of the national revenue, the federal government through Distributive Pool Account (DPA) decrees plummeted the barest minimum the revenue accruable to the Niger Delta State.The establishment of the distributive pool Account from which the federal capital territory, market the evolution of revenue sharing principle in Nigeria.More so, it is equally believed that leaving as much as 50% of the huge revenue derived from oil resource for a minority group like Niger Delta will create obvious economic imbalance in the federation or will make a component of the federation economically powerful more than the entire federation.In view of the above development, the Niger Delta people felt economically short charged or marginalized in favour of other regions in the country and that precipitated their agitation or struggle for resource control.
Crude oil is the primary engine for national economic growth and development.It is therefore reasonable to expect that the areas producing the nations crude oil would be very highly developed as compensation for what is taken away as well as for the devastation on the land engendered by the exploration process.The Niger Delta area suffers near neglect by both the federal government which claims ownership of the oil and the multinational companies which actually exploits the oil reserves.It is a picture of wanton environment degradation of all types -land (despoliation of farmlands), worker (destruction of fishing areas and sources of drinking water) and air (release of many pollutants causing disease in humans, animals and plants).The people in the Niger Delta States who hitherto were able to cater for their needs are now being confronted with poverty through loss of their means of livelihood.The intervention of the federal government though the Niger Delta Development Commission (NDDC) seems to be welcome development.
However the missing factor seems to be the proper treatment of the derivation principle in a way that would enable the state and local government of the oil producing areas to handle their own felt needs and priorities.
The minimization of the derivation factors over the year from the earlier 50% to 1% and now 13% only as it affects crude oil is unjust and unfair when one considers that Igbeli marble a 55% derivation and the value added tax (VAT) still attracts 20% derivation.(Ikeji 2011:133).
Resource distribution includes both statuses and material resources.In fact, it includes the distribution of all scarce but allocative resources.The location of government projects of well as the pattern of recruitment into political offices and the public services are also yardsticks for measuring the fairness of leaders in the distribution process in Nigeria.In order to ensure relative fairness in the appointment of people from various groups into the federal public service the constitution provides for the establishment of the federal character commission to monitor the pattern of appointment into all the public services of federal state and local government in order to give Nigerians a sense of belonging to nation.Crisis of discrimination and marginalization by groups have not abated since the establishment of this commission.(Elaigwu 2007).
On the horizontal level, there has been a crisis of marginalization by all groups.The oil producing states of the Niger Delta are angry that the dividends of oil produced in their area go to other parts of the country without adequate concern for their own interests.Basically whole oil accounts for over 80% of the country's annual revenue, it has not changed the lives of the Niger Delta people while the constitution provides for 1% revenue on the principle of derivation to the oil producing areas, the government of these states argues to pay their funds to the oil producing states from January 2000 and has failed to do so between May 2 and December 1999, in response, the governors of the south south zone decided to demand for 100% control of its resource.(Elaigwu 2002:11).
Similarly, states with solid minerals also complain that inspite of environmental degradation as a result of mining activities in their area they have not been adequately compensated likewise states from which hydro electric power is generated.According to Obi (2004) the oil minorities is one of the most critical within Nigeria's troubled federal experiment.Its took lie in the aftermath of the Nigerian civil war when the hopes of the oil minorities that would gain full rights over the oil mined in their territory were dashed by the shift from the allocative principle of derivation to equality and population of states which benefited the big ethnic nationality groups which has historically marginalize the minorities.Federal fiscal centralization under military rule minorities from any direct areas to oil.Ever since, the oil minorities have mounted pressures for the return to derivation as a major allocative principle that would ensure justice, equity and fairness.The oil producing states of Niger Delta are angry that the dividends of oil produced in their area, go to other parts of the country without adequate concern for their own interest.Basically, while oil accounts for over 80% of the country's annual revenue it has not changed the lives of the Niger Delta people.While the constitution provides for 13% revenue on the principles of derivation to the oil producing areas, the governors of this stage argued that the federal government only agreed to pay these funds to the oil producing states from January 2000 and has failed to do so between May 29 and December 1999.
The problems of the oil producing area have led to the Niger Delta youths to challenge the perceived injustice mated out to the region.This led to the formation of the Niger Delta people volunteer force (NDPVF) and lately movement for the emancipation of Niger Delta (MEND).The groups is an agglomeration of various youth group who are committed to self actualization and economic empowerment of the region.
The contemporary notions of struggle for resource control have been characterized by both peaceful and violence activities, while the period when the ogonis were at the forefront of the struggle war largely peaceful, the recent shift of focus to the Ijaws witnessed an escalation in militancy and violence (Ako, 2012).The response of the federal government has typically included the development boards, state creation, facilitation and more recently the amnesty initiative.Therefore, the relative peace in the region and consequent increase in oil production figures is touted as evidence of the success of the amnesty initiative by the federal government.
Basting in the emphasis of all curbing the consequences of the malaise, the federal government has neglected to resolve the underlying issues that instigated and exacerbated the struggle for resource control and resultant restiveness in the region.Thus while the government is spending billions of Naira in stipend payments as well as educational and vocational training for exmilitants, it has not invested any meaningful resources to remedy the rook cancer of the struggle for resource control (Ako, 2012).According to C. Chinweze, G. Abiola -Oloke (2009) it was estimated that, more than 100 million cubic makers of gas is flared annually around the globe, despite the incentive to capture the associated gas and bring it to the market; that the quantity of gas flared in the Niger Delta region is enough to cover the annual gas consumption needs of Germany and France put together.Consequently more attention is focused on the oil sector by the Nigerian government resulting in the neglect of the agricultural sector of the economy.
Currently, there are over eleven oil companies operating more than 158 oil fields and about 1,481 oil wells in the Delta region with ugly indices such as gas flaring and oil spills.Adeoki and Imuoh, (2015).Between 1976 and 1999 a total of 3000 oil spill companies operating in the Delta region, with over two million barrels of oil spillage into Nigeria's terrestrial coastal and offshore marine environments (Agbu, 2015).With response to gains flaring, statistics also show that about 24,240,000 sef of gas was flared in 1991 alone.This is equivalent of 76 percent of gross production of oil in Nigeria during the same year.By 1995, the percentage of gas flared has increased to 76.79 percent Adeoki and Imuoh (2015).
The reality is that the percentage of gas flaring and its consequences on Niger Delta environment is ever on the increase.Unfortunately, the managers of Nigeria state are more concerned about the rent accruing from oil exploitation.As such, when the federal government, took over from the colonial government, the only difference in their exploitative character of oil resources in the Niger Delta is that one indigenous the other is foreign.This is why the struggle for resource control metamorphosed to armed struggle.The climax of this effort was when a Niger Delta man was elected president of Nigeria in the 2011, general election, there is former President Goodluck Ebere Jonathan.Under listed are some of the reasons for the struggle for resource control.

RESULTS AND DISCUSSION
1.The injustice and inequality that characterize the distribution of the revenue that accure from oil revenue.2. The jettisoning of derivation as a fundamental principle of revenue allocation which reduced the climax of funds joint to the pauperized oil producing areas of the Niger Delta.3. The jettisoning of derivation as a fundamental principle of revenue allocation which reduced the climax of funds joint to the pauperized oil producing areas of the Niger Delta.4. The introduction of sharia judicial system by some northern states which was seen by the southern states at a major text for me federal constitution.Demand for resource control is, therefore, an indirect constitutional cum economic response to the introduction of Sharia. 5.The systematic distribution of the ecosystem in the oil producing areas which led to environmental degradation, pollution, acid rain and the attendance unemployment and mass poverty.6.Failure of the multinational oil companies to contribute to the social and economic development of the oil producing states.7. The activities of ethnic militancy made up of unemployed youths in the oil producing communities which spurred their traditional rulers and political leaders to necessary political actions.8.The new democratic dispensation which were violently suppressed under military rule.

CONCLUSIONS AND RECOMMENDATIONS
The poor structural layout of the Nigerian federalism is rooted in our colonial history, our colonial history affects the structure of the federal system we are operating.The two lower levels of government have been treated like more appendages rather than as a part of truly federal system of which fiscal autonomy should be granted and assured.The relationship has incapacitated the lower levels in their quest to perform their constitutionally assigned responsibilities.It has also precipitated a high level of distrust among the ethnic groups, thereby worsening the fragile state of the Nigeria federation due to its attendants conflict and crises.1.Over dependence on oil revenue should be discouraged.The Nigerian stake should focus on the need for diversification into other sources of revenue such as development of agricultural sector and industrial sector by providing incentives such as tax concession, provision of facilities needed by this seeker in other not to be affected by fall of oil prices in the international market.2. The Nigeria state should be restructured to reflect fiscal federalism in its character and composition.3. Massive state infrastructural development of the Niger Delta area to equal of reflect the magnitude of oil resource exploited from the region by the federal government.These recommendations if properly considered will go a long way in solving the perennial problem of revenue allocation in Nigeria.

FURTHER STUDY
This research still has limitations so further research needs to be done on the topic "Revenue Allocation and the Challenge of Federalism in Nigeria."