Natural Resource Taxation, Revenue Sharing, and Community Development in Bayelsa State

This study empirically analyses the relationship between natural resource tax revenue, the derivation-based revenue sharing framework, and community development outcomes in Bayelsa State, South South Nigeria. Bayelsa State, as one of Nigeria's major oil-producing states, receives substantial derivation allocations from petroleum tax revenue, yet communities hosting oil infrastructure experience some of the worst development indices in the country. This research investigates the disconnect between resource tax revenues and community welfare through a mixed-methods empirical design. Quantitative analysis employs community-level panel data on public goods provision, school enrolment, health facility access, and infrastructure quality for 60 communities in five local government areas over eight years, matched to LGA revenue allocation data. Qualitative data from focus group discussions with 80 community leaders and interviews with ten state government officials provide institutional context. Panel regression with community fixed effects and thematic analysis are employed. The study expects to find that increases in derivation-based revenue allocations have a weak and statistically inconsistent effect on community welfare, reflecting significant leakages between revenue receipt and project delivery. Ethnic and political proximity to state power is anticipated as a stronger predictor of community project allocation than development need. Contributions include a unique community-level panel dataset linking resource revenue to welfare indicators in Bayelsa. Recommendations address community development agreement reforms and participatory budgeting. Keywords: natural resource taxation, derivation, community development, Bayelsa State, oil revenue.