Analysis of Revenue Sharing and Fiscal Federalism in the Nigerian Solid Minerals Sector

Fiscal arrangements governing the solid minerals sector in Nigeria determine the distribution of mining revenues between federal, state, and local government tiers and influence state-level incentives for mining development. This study analyses the revenue sharing framework applicable to the solid minerals sector and assesses its adequacy and equity implications for mineral-endowed states in the federation. A fiscal policy analysis was conducted using the Nigerian Minerals and Mining Act 2007, Minerals and Mining Regulations 2011, Finance Act provisions, and Federal Account Allocation Committee distribution data for the period 2019 to 2024. Comparative analysis was made against fiscal regimes in comparable African mining jurisdictions. Key informant interviews were conducted with economists, state government finance officials, and mining sector policy analysts. Findings indicate that mineral-rich states receive only 13 percent of solid mineral royalties through the Federation Account formula, compared to 50 percent in the oil and gas sector under derivation provisions. This disparity reduces state government incentives to enforce compliance and invest in mining infrastructure. The study argues for a revised derivation formula for solid minerals revenues of at least 25 percent and recommends the establishment of a Solid Minerals Stabilisation Fund modelled on the Excess Crude Account. Keywords: revenue sharing, fiscal federalism, solid minerals, Nigerian mining, royalties.