Federalism and Revenue Allocation in Nigeria: A Constitutional Examination of the Revenue Allocation Formula

Revenue allocation is among the most contested constitutional subjects in Nigerian federalism, reflecting underlying tensions between the principle of derivation, population-based distribution, and equity provisions that govern the sharing of federation account revenues among federal, state, and local governments. The 1999 Constitution and the Allocation of Revenue (Derivation and Other Factors) Act govern this allocation, yet the current formula has been subject to persistent agitation from mineral-producing states in the South South and South East zones demanding higher derivation percentages. This study examines the constitutional framework for revenue allocation in Nigeria, evaluating the legal basis of the existing formula, the jurisprudence of the Supreme Court on revenue allocation disputes, and comparative allocation systems from Canada and the United States. A doctrinal methodology is applied, reviewing the 1999 Constitution Sections 162 to 168, the Revenue Mobilisation, Allocation and Fiscal Commission Act, and Supreme Court decisions on revenue allocation from 2002 to 2023. The study evaluates the derivation principle's constitutional scope and judicial interpretation. Available fiscal federalism literature from Nigeria identifies the underfunding of the derivation principle below 13 percent as the most constitutionally contested aspect of the current formula. The Competitive Federalism Theory and the Resource Federalism Framework provide the analytical reference. Recommendations address RMAFC constitutionally guided formula review. Keywords: revenue allocation, federalism, derivation principle, constitutional law, Nigeria.