Wednesday, 10 August 2016

VERTICAL AND HORIZONTAL ALLOCATION FORMULAR

How Funds are allocated to LGAs in Nigeria

INTRODUCTION

Revenue allocation in Nigeria a central theme in government has a historical antecedent. In process, many commissions / committees have been set-up at different times in the Nigeria national history and were saddled with the responsibility of examining various fiscal issues and recommend the best principles and formulas in sharing national revenues to meet up with the challenges of the time.
Some of these commissions/committees are;
1. The Dina Interim Committee (1968)
2. The Raisman commission (1958)
3. The Hicks-phillipson commission (1951)

4. The phillipson commission (1946)
5. The Binns Commission (1964)
6. The chicks commission (1968)
Above this, it is worthy of note that all the commissions/committees listed above were adhoc in nature except for the revenue mobilization Allocation and fiscal commission which was established as a legal and permanent entity to deal with fiscal matters on a more regular basis as the need arises.

THE VARIOUS PRINCIPLES RECOMMENDED BY THE COMMISSIONS/COMMITTEES OF REVENUE ALLOCATION IN NIGERIA 

They are various recommendations of the Revenue Allocation commissions/committees in Nigeria. Here, we have fourteen (14) principles of revenue sharing of the national cake they are:
1. Population
2. Landmark and Ternaim
3. Internal Revenue Generation Effort
4. Equality of states
5. Fiscal efficiency
6. Minimum responsibility of government
7. Absorptive capacity
8. Basic needs
9. Independent Revenue/Tax effort
10. Derivation
11. Minimum material standards (MMS)
12. Equality of Access to development opportunities
13. Balanced Development
14. Social development factor
All these principles above have continued to serve as the yardstick for revenue allocation up to this day.

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