CHAPTER ONE

1.1         INTRODUCTION

Federalism has come to be accepted as the most variable formula for coping with the problems associated with multi-ethnic state. It is a system of government which presupposes constitutional division of powers among levels of government. Federalism as practiced in Nigeria is at the best nothing more than mere constitutional design (merely division of power without practicing the principles of federalism) imposed on Nigeria by the colonial masters.

Federalism in Nigeria, is a compromised solution to the problems of ethnic mistrust and mutual suspicion, with the ethnic nationalities that made up the country as a result of creation of a state out of divers' ethnic, tribal,, cultural and religious groups. After creating the country the colonizers introduced a federal system of government under the Richard constitution of 1946 and liffleton constitution of 1954, in agreement with the political leaders so as to address the problems which a unitary form of government may pose to divers' people of Nigeria. There are some factors that account for the introduction of federalism in Nigeria. These include both internal and external factors. The practice of federal system of government in Nigeria cannot be understood without tracing the historical evolution of the political history of Nigerian state. Nigeria is characterized by predominant of tree regions which are: The Hausa and Fulani of the north, the Yoruba of the west and the Igbo of the east.

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The major problems affecting federal practice in Nigeria are: the issue of resources allocation, sharing and usage of the tax burden, the issue of what criteria should take procedure over the other in the sharing of federally collected revenue. All these and more has for long remained problematic as far as federal practice is concern in Nigeria. The issue of revenue allocation in Nigeria dated back to the Philipson commission at 1940, to 1979 constitution that provide the establishment of federal character principle and inl995 gives way to creation of federal character commission to ensure the implementation of federal character principle as preserved in the constitution. The 1999 constitution revealed that revenue allocation is in favor of the federal government and that of the criteria used in horizontal allocation of revenue among states has also been faulted. Problem arises as to which criteria should determine how revenue

is  to  be         divided  horizontally.  The  problems  arose  between  the  southerners  and

northerners and each are of the opinion of criteria should be taken. The former emphasis in the principal of derivation, where the later emphasized on social needs. As a result of this divergent interest between these two sections of the country (southerners and northerners), revenue allocation has been politicized and this has been attributed to the cause of the social and political problems confronting the country. Even with 13% derivation provided for the oil producing region in section 162, subsection 2 of the 1999 constitution, the problem still remains unsolved, hence the persistence clamor for resources control by the oil producing communities. To Itse Sagay (200l)"....Federal system of government as presently practiced in Nigeria is problematic. Sectional

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interest: ethnic intolerance, religious bigotry, mutual mistrust and the bone on Nigeria politics. They also extended to revenue allocation and the causes of the various crises in the country is simply the issue of resources distribution and allocation"

1.2         STATEMENT OF THE RESEARCH PROBLEM

This study is to examine the problems associated with resources control : the formula to be used in sharing federally collected revenue, sharing and usage of the tax burden, control of resources by the federal government, how revenue are to be divided horizontally and vertically and also the current clamor for resources control by one part of the country.

1.3         AIMS AND OBJECTIVES OF THE STUDY

·         To examine the revenue allocation formula in Nigeria.

·         To evaluate the bone of contention of those agitation for resource control in Nigeria.

·         To examine the sharing of tax burden between the federal, state and local government in Nigeria.

·         To access feasibility and resources control in Nigeria and the obstacle to its implementation

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1.4         HYPOTHESIS/ ASSUMPTIONS OF THE STUDY

1.      l. The nature of federal system determines how revenue is generated and allocated.

2.      Resources control can only be succeed in a country which adheres to the principles of true federalism.

1.5         THE SIGNIFICANT OF THE STUDY

The major significant of this study is to contribute to the search for the right political order i.e. right fiscal order.