Revenue Sharing, Horizontal Equity, and Development Disparities among Local Government Areas in Nigeria: An Analytical Framework

This study analytically examines the revenue sharing formula applied to local government areas in Nigeria and its implications for horizontal equity and development disparities across geopolitical zones. Nigeria's fiscal federalism framework distributes federal revenues to local governments using criteria including population, land mass, equality of local government areas, internal revenue generation effort, and social development factors. However, the distributional consequences of this formula for inter-local government equity and its effects on development outcome disparities remain empirically underexplored, particularly across zones with different demographic and geographic profiles. Guided by the Horizontal Equity Theory and the Fiscal Federalism Framework, this research employs secondary data analysis covering Revenue Mobilization Allocation and Fiscal Commission records for the period 2019 to 2024, National Bureau of Statistics poverty and development indicators, and World Bank Nigeria sub-national fiscal data. A panel data econometric approach, including Gini decomposition and spatial regression analysis, is employed to test distributional equity and development outcome relationships. Primary data is gathered from 120 respondents including fiscal policy experts, local government finance officers, and state planning commission officials through structured questionnaires. The study fills a significant gap in analytical fiscal federalism research at the local government level in Nigeria. Findings are expected to demonstrate that the current formula perpetuates development inequalities between densely populated and sparsely populated zones. Recommendations include a review of revenue sharing criteria with explicit equity weighting and a development needs adjustment factor. Keywords: Revenue sharing, horizontal equity, local government, development disparities, fiscal federalism, Nigeria.